Franchise Disclosure Documents are under severe and increased scrutiny by the courts for strict compliance with franchise disclosure laws and regulations. Daycare franchisors operate in a complex legal and regulatory environment with a myriad of information that must be disclosed to prospective franchisees.

Franchisors operating in Ontario and other provinces that regulate franchise disclosure are required to provide a valid Franchise Disclosure Document (FDD) to prospective franchisees that must contain not only all fundamental components prescribed by franchise legislation, but also all “materials facts”.   Under franchise legislation, a “material fact” includes a wide array of information about the business and capital of the franchisor and its associates, as well as the franchise system, that would reasonably be expected to have a significant effect on prospective franchisees’ decision to purchase the franchise or the value of the franchise.

The legal disclosure obligations of daycare franchisors are considerably more complex than the disclosure obligations of most other franchise systems. For example, relevant information about the requirements of the Child Care and Early Years Act, 2014, municipal control over the allocation of federal grant money and the location of new centres, and the ongoing legal obligations of the daycare centres to the Ontario Ministry of Education and the municipality, are among the myriad of material facts that daycare FDDs should disclose to prospective franchisees.

To reduce daycare franchisors’ risk of damaging rescission claims, we have prepared an eBook outlining industry-specific information that daycare franchisors (or companies considering expanding through a franchise business model) must consider as part of their legal disclosure obligations to prospective franchisees: Is Your Franchise Disclosure Document Legally Compliant? A Guide for Daycare Franchisors. The eBook focuses on the four categories of pertinent material information that daycare franchisors must disclose to prospective franchisees to mitigate the risk of damaging rescission claims:

  1. setting up a day care
  2. the location
  3. operating a daycare centre, and
  4. financial information.

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