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What is Franchise Law?

Best Franchise lawyers in Canada as ranked by Lexpert

The practice area of franchise lawyers is essentially a commercial law practice area which, due to the special needs of this important industry, necessarily incorporates various legal skills normally associated with other, unrelated practice areas. For this reason it has attained, in Canada and internationally, the status of a distinct practice area.

 

Generally the practice area includes documentation work including preparation of applications, franchise agreements, assignments, guarantees, indemnities and security agreements; regulatory compliance work including prospectus preparation, disclosure documents, and offering circulars; financing work which may include public offerings and private investment syndications; commercial leasing and other real estate arrangements; acquisition and sales work involving purchasing or disposing of new and existing franchises, as well as entire franchise systems; master franchise or area development agreements; international work which includes the establishment of foreign franchise systems in Canada and the Canadianization of foreign franchise documentation; intellectual property work including securing patents, copyright and particularly trademark protection; and sales and tax planning work which may include significant cross-border (particularly Canada-US) aspects.

 

Please note that the Lexpert Directory has separate practice areas for:

  • Commodity tax and customs lawyers
  • Competition lawyers
  • Employment lawyers
  • Intellectual property lawyers
  • International trade lawyers

 

Are franchises regulated in Canada?

While there are no federal laws on franchises in Canada, there are franchise-specific disclosure laws or disclosure legislations in some provinces, namely – in British Columbia, Alberta, Manitoba, New Brunswick, Ontario, and Prince Edward Island. For Quebec, although there is also no provincial law on franchises, the relationship between the franchisee and the franchisor, and their contract, are governed by its Civil Code.

 

Generally, these disclosure legislations are mostly the same although they may differ is some terminologies used. Thus, franchise lawyers are best consulted for the specific details of each provincial franchise legislation. Below are some of their commonalities:

 

Rights

Specific definitions of a “franchise” among the different franchise legislations may deviate from each other; but commonly, a franchise is the right granted by the franchisor for a franchisee to use the former’s trademark, trade name, logo or advertising during the latter’s business, hence obligating the franchisee to tender payment to the franchisor as agreed upon by both parties in a franchise contract.

 

Along with this is the right of the franchisor to exercise major control over the franchisee’s operations, marketing, physical designs, location and outlets, and other forms of control. Assistance may also be provided by the franchisor, such as staff and management training, among others. Franchise lawyers are commonly used to clarify these contracts for either party.

 

The said franchise contract may also contain other rights and obligations the parties may stipulate. Mostly, these franchise contracts are contracts of adhesion, or a consumer-standard form, which means that they are prepared only by one party (the franchisor, in this case), and the other party (the franchisee) will only either accede or deny such contract. Although, such terms and conditions in the franchise contract may still be subject to negotiations, depending on both parties.

 

Hence, it is important to engage the services of a franchise lawyer at this time, since a franchise contract will provide for the specific rights and obligations of both parties, methods of settling disputes, grounds of rescission, and other important details. Franchise lawyers may assist in interpreting such contracts and may also help in negotiations if there are unfavourable conditions therein.

 

Coverage

These franchise legislations apply both to domestic franchisors (Canadian-owned businesses offering a franchise) and foreign franchisors (foreign companies entering Canadian jurisdiction).

 

Disclosure Document

Before the signing of the franchise contract, a franchisor is obligated under the law to provide the prospective franchisee a disclosure document, which would provide for all the details of the franchise and all material facts that might affect the decision of the prospective franchisee in pursuing the franchise contract. This is a mandatory act from the franchisor required by law, which must also include for a certificate of disclosure to be signed by the franchisor.

 

This is based on the rationale that parties to a franchise contract are burdened with disclosing necessary information for the perfection of the contract in good faith.

 

Should there be violation on this obligation of a franchisor to provide a disclosure agreement, a franchisee would be entitled to either the rescission of the contract, or relief for damages on the ground of misrepresentation on the part of the franchisor.

 

Duty of Fair Dealing and Good Faith

After the signing of the franchise contract, and for the duration of the franchise, both parties are expected to diligently follow what has been agreed upon by in the franchise contract. This is in addition to the minimum statutory standards found in federal and provincial laws on commerce, labour, competition, intellectual property rights, and arbitration or mediation laws should the franchise agreement have an arbitration or mediation clause.

 

Regulator

Since there is no single federal government agency regulating franchises, remedies against any of the contracting parties arising out of a franchise contract are filed before and resolved by the judicial courts. Here, franchise lawyers assist clients (who may either be the franchisee or franchisor) in pursuing said remedies, which may be for specific performance, rescission of the contract, or for damages.

 

Right to Associate

Franchisees may also form an association or organisation under the law. In turn, franchisors may not impair this right of franchisees, either directly through a prohibition in the franchise contract, or indirectly through the acts of the franchisor.

 

How does franchising work in Canada?

A franchise’s life starts in the offer, either of the franchisee or the franchisor. Negotiations may ensue, with the execution of the disclosure document by the franchisor. The signing of the franchise contract or agreement thus lawfully creates the franchise.

 

Franchise lawyers may represent either party in any of these stages since compliance with the law depends upon the specific provincial law that shall govern the preparation, perfection, and consummation of the franchise contract.

 

How do I get out of a franchise agreement in Canada?

A franchisor or franchisee who is not in default may legally break out of a franchise agreement. Absent any fault attributable to either party, the franchise contract or agreement may also be bilaterally rescinded, or upon the expiration of the said contract or agreement on the date stipulated therein.

 

Failure to Deliver the Disclosure Document

The franchise legislations have a strong emphasis on the duty of the franchisor to deliver the disclosure document to the franchisee, to help the latter make a consensual decision whether to enter a franchise contract or not. If there is failure by the franchisor on this obligation, the franchisee is entitled to the rescission of the contract, damages, and losses incurred by the franchisee.

 

Breach of Franchise Agreement

The breach of the franchise agreement may be committed by either the franchisee or the franchisor and may have different effects and reliefs on both parties.

  • Grounds for Breach by Franchisee
    • Non-payment of the franchise deal or royalties
    • Stipulations under the franchise contract was not followed
  • Grounds for Breach by Franchisor
    • Non-delivery or insufficiency of disclosure document
    • Non-performance of obligations under the franchise contract

 

How are franchises taxed in Canada?

Franchise lawyers may help franchisees with regards to their tax obligations. But generally, franchisees are subject to income tax, whose rate may depend on the province they are located at, such as the GST/HST, QST, or PST.

 

Interested in entering into a franchise agreement, or is already in one and seeks advise for any disputes thereof? Head down below for a list of the best franchise lawyers to reach Lexpert Ranked status.

Ontario

Toronto Leading Firms - Major Full Service
Most Frequently Recommended
Cassels Brock & Blackwell LLP
Dale & Lessmann LLP
Osler, Hoskin & Harcourt LLP
Consistently Recommended
Gowling WLG
McCarthy Tétrault LLP
Repeatedly Recommended
Dentons Canada LLP
DLA Piper (Canada) LLP
McMillan LLP
Miller Thomson LLP
Stikeman Elliott LLP
Toronto Leading Firms - Boutique Firms
Most Frequently Recommended
KMB Law
Sotos LLP
Repeatedly Recommended
Goldman Hine LLP
Jones Law Professional Corporation
Law Works P.C./L.C.
Teplitsky LLP
Toronto Leading Practitioners - Franchisee
Most Frequently Recommended
Adrienne Boudreau
Toronto, Ontario
Sotos LLP
Peter Viitre
Toronto, Ontario
Sotos LLP
Consistently Recommended
David Altshuller
Toronto, Ontario
Ricketts, Harris LLP
Idan Erez
Toronto, Ontario
Sotos LLP
Ben V. Hanuka
Toronto, Ontario
Law Works P.C./L.C.
Clark L.E. Harrop
Toronto, Ontario
Dale & Lessmann LLP
Repeatedly Recommended
Lara Di Genova
Toronto, Ontario
Blaney McMurtry LLP
Sheldon L. Disenhouse
Toronto, Ontario
Dentons Canada LLP
David N. Kornhauser
Toronto, Ontario
Loopstra Nixon LLP
Richard D. Leblanc
Toronto, Ontario
Miller Thomson LLP
Jonathan C. Lisus
Toronto, Ontario
Lax O'Sullivan Lisus Gottlieb LLP
Jonathan Mesiano-Crookston
Toronto, Ontario
Goldmans LLP
Toronto Leading Practitioners - Franchisor
Most Frequently Recommended
Joseph Y. Adler
Toronto, Ontario
KMB Law
Adrienne Boudreau
Toronto, Ontario
Sotos LLP
Allan D.J. Dick
Toronto, Ontario
Sotos LLP
Jennifer Dolman
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
Chad Finkelstein
Toronto, Ontario
Dale & Lessmann LLP
Andraya C. Frith
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
Jeffrey P. Hoffman
Toronto, Ontario
Dale & Lessmann LLP
Darrell E. Jarvis
Toronto, Ontario
Fasken Martineau DuMoulin LLP
Adam Ship
Toronto, Ontario
Ship-Law-ADR
John Sotos
Toronto, Ontario
Sotos LLP
Peter Viitre
Toronto, Ontario
Sotos LLP
Larry M. Weinberg
Toronto, Ontario
Cassels Brock & Blackwell LLP
Consistently Recommended
David Altshuller
Toronto, Ontario
Ricketts, Harris LLP
Jason Brisebois
Toronto, Ontario
Sotos LLP
Idan Erez
Toronto, Ontario
Sotos LLP
Helen Fotinos
Toronto, Ontario
Dentons Canada LLP
Ben V. Hanuka
Toronto, Ontario
Law Works P.C./L.C.
Clark L.E. Harrop
Toronto, Ontario
Dale & Lessmann LLP
Lloyd M. Hoffer
Toronto, Ontario
KMB Law
Christopher Horkins
Toronto, Ontario
Cassels Brock & Blackwell LLP
Noah Leszcz
Toronto, Ontario
Cassels Brock & Blackwell LLP
Andrae Marrocco
Toronto, Ontario
McMillan LLP
Dominic Mochrie
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
Frank Robinson
Toronto, Ontario
Cassels Brock & Blackwell LLP
Derek Ronde
Toronto, Ontario
Cassels Brock & Blackwell LLP
David Shaw
Toronto, Ontario
Dale & Lessmann LLP
Geoffrey B. Shaw
Toronto, Ontario
Cassels Brock & Blackwell LLP
John Yiokaris
Toronto, Ontario
Sotos LLP
Repeatedly Recommended
Dan Caldarone
Toronto, Ontario
Caldarone Law Office
Cassandra Da Re
Toronto, Ontario
Dale & Lessmann LLP
Lara Di Genova
Toronto, Ontario
Blaney McMurtry LLP
Sheldon L. Disenhouse
Toronto, Ontario
Dentons Canada LLP
Daniel Hamson
Toronto, Ontario
Sotos LLP
W. Brad Hanna
Toronto, Ontario
McMillan LLP
Christine Jackson
Toronto, Ontario
Osler, Hoskin & Harcourt LLP
David N. Kornhauser
Toronto, Ontario
Loopstra Nixon LLP
Richard D. Leblanc
Toronto, Ontario
Miller Thomson LLP
Jean-Marc Leclerc
Toronto, Ontario
Sotos LLP
Edward N. Levitt
Toronto, Ontario
Dickinson Wright LLP
Jonathan C. Lisus
Toronto, Ontario
Lax O'Sullivan Lisus Gottlieb LLP
Jonathan Mesiano-Crookston
Toronto, Ontario
Goldmans LLP
Daniel F. So
Toronto, Ontario
Dale & Lessmann LLP
Stephanie Sugar
Toronto, Ontario
McCarthy Tétrault LLP
Hamilton Leading Firms
Repeatedly Recommended
Gowling WLG
Hamilton Leading Practitioners - Franchisor
Most Frequently Recommended
Debi M. Sutin
Hamilton, Ontario
Gowling WLG
London Leading Firms
Consistently Recommended
Siskinds LLP
Repeatedly Recommended
McKenzie Lake Lawyers LLP
London Leading Practitioners - Franchisor
Consistently Recommended
Peter Dillon
London, Ontario
Siskinds LLP
Ottawa Leading Practitioners - Franchisee
Repeatedly Recommended
Sylvie Patenaude
Ottawa, Ontario
Sicotte Guilbault LLP
Ottawa Leading Practitioners - Franchisor
Repeatedly Recommended
Sylvie Patenaude
Ottawa, Ontario
Sicotte Guilbault LLP

Québec

Montréal Leading Firms
Most Frequently Recommended
Lapointe Rosenstein Marchand Melançon, L.L.P.
Consistently Recommended
Cain Lamarre
Fasken Martineau DuMoulin LLP
Lavery, de Billy, L.L.P.
Osler, Hoskin & Harcourt LLP
Repeatedly Recommended
Alepin Gauthier Avocats
Dentons Canada LLP
Gowling WLG
Miller Thomson LLP
Montréal Leading Practitioners - Franchisee
Consistently Recommended
Frédéric Patrice Gilbert
Montréal, Québec
Fasken Martineau DuMoulin LLP
Montréal Leading Practitioners - Franchisor
Consistently Recommended
Bruno Floriani
Montréal, Québec
Lapointe Rosenstein Marchand Melançon, L.L.P.
Frédéric Patrice Gilbert
Montréal, Québec
Fasken Martineau DuMoulin LLP
Repeatedly Recommended
Stéphanie Destrempes
Montréal, Québec
Cain Lamarre
Éric Préfontaine
Montréal, Québec
Osler, Hoskin & Harcourt LLP

British Columbia

Vancouver Leading Firms
Most Frequently Recommended
Cassels Brock & Blackwell LLP
Consistently Recommended
Borden Ladner Gervais LLP (BLG)
Repeatedly Recommended
Dentons Canada LLP
DLA Piper (Canada) LLP
Gowling WLG
Shields Harney
Vancouver Leading Practitioners - Franchisor
Most Frequently Recommended
Peter V. Snell
Vancouver, British Columbia
Cassels Brock & Blackwell LLP
Consistently Recommended
Blair A. Rebane
Vancouver, British Columbia
Borden Ladner Gervais LLP (BLG)
Judy A. Rost
Vancouver, British Columbia
Alexander Holburn Beaudin + Lang LLP
Repeatedly Recommended
Tony Wilson
Vancouver, British Columbia
embarq law

Alberta

Calgary Leading Firms
Consistently Recommended
Cassels Brock & Blackwell LLP
Osler, Hoskin & Harcourt LLP
Repeatedly Recommended
Bennett Jones LLP
Dentons Canada LLP
Calgary Leading Practitioners - Franchisee
Repeatedly Recommended
Tamara Prince
Calgary, Alberta
Cassels Brock & Blackwell LLP
Calgary Leading Practitioners - Franchisor
Repeatedly Recommended
Tamara Prince
Calgary, Alberta
Cassels Brock & Blackwell LLP
Edmonton Leading Firms
Most Frequently Recommended
Witten LLP
Repeatedly Recommended
Dentons Canada LLP
Edmonton Leading Practitioners - Franchisee
Repeatedly Recommended
Susan D. Clapp
Edmonton, Alberta
Witten LLP
Edmonton Leading Practitioners - Franchisor
Repeatedly Recommended
Susan D. Clapp
Edmonton, Alberta
Witten LLP

New Brunswick

Fredericton Leading Practitioners - Franchisee
Most Frequently Recommended
Michael J. Melvin
Fredericton, New Brunswick
McInnes Cooper
Fredericton Leading Practitioners - Franchisor
Most Frequently Recommended
Michael J. Melvin
Fredericton, New Brunswick
McInnes Cooper
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