Franchise Disclosure Documents are under severe and increased scrutiny by the courts for strict compliance with franchise disclosure laws and regulations. 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.
For a QSR or retail franchise, “material facts” include information about the franchise system, lease, location and historical financials that must be disclosed to prospective franchisees in various types of franchise sales.
We have prepared an eBook, Is Your Franchise Disclosure Document Legally Compliant? A Guide for QSR and Retail Franchisors, that outlines advanced disclosure issues that QSR and retail franchisors should identify and disclose to prospective franchisees to reduce the risk of damaging rescission claims. We address many of unique aspects of franchise systems in these industries such as:
- a mix of store concepts within the franchise system;
- conversions of franchised locations from other operations;
- lease history and landlord’s requirements, and
- competing brands affiliated with the franchisor.
Subscribe to get a copy of the eBook.