Buying a Franchise in Ontario: The Arthur Wishart Act and the Disclosure Document

Buying a franchise can seem like a turnkey path to business ownership — a proven brand, a playbook, a support system. But franchising is also one of the most asymmetrical business arrangements a buyer can enter. The franchisor has almost certainly done this dozens or hundreds of times. You probably have not. Ontario's Arthur Wishart Act (Franchise Disclosure), 2000 exists to level that playing field. Before you sign anything, you need to understand what the Act requires and what to look for in the disclosure document you receive.

What Is the Arthur Wishart Act?

The Arthur Wishart Act is Ontario's franchise-specific legislation. Its core function is mandatory pre-sale disclosure: a franchisor must give a prospective franchisee a disclosure document meeting strict requirements before a franchise agreement is signed or any money changes hands.

The Act also codifies the duty of fair dealing — both parties must perform their obligations under a franchise agreement in good faith and in accordance with reasonable commercial standards. It gives franchisees the right to associate with other franchisees without interference from the franchisor.

The Disclosure Document: What It Must Contain

The disclosure document is a dense package of information, but that density exists for your protection. Under the Arthur Wishart Act, a proper disclosure document must include:

Franchisor Background

• Names, addresses, and business experience of the franchisor and its officers and directors
• Details of any civil, criminal, or regulatory proceedings involving the franchisor or its principals within a specified period

Financial Statements

Audited financial statements for the franchisor, typically for the most recent fiscal year (and sometimes two or three years). These tell you whether the franchisor is financially healthy enough to support you long-term.

Franchise System Details

• A description of the franchise system and the territory (if any) granted
• The franchisee's obligations under the agreement
• Training and support provided
• Restrictions on what you can sell and from whom you must buy supplies

Costs and Fees

A complete schedule of fees: franchise fee, royalties, advertising fund contributions, technology fees, renewal fees, and transfer fees. There should be no material fee that does not appear in the disclosure document.

List of Current and Former Franchisees

This is one of the most valuable items. The Act requires the franchisor to provide contact information for current franchisees and franchisees who have left the system in a recent period. Call them. Ask them whether they would do it again, whether the franchisor supports them, and whether the numbers they were shown in pro forma projections were realistic.

Any Earnings Claims

If the franchisor makes any representation about sales, revenues, or profits, it must be substantiated in the disclosure document. If the franchisor makes verbal earnings claims but puts nothing in writing, that is a significant red flag — and potentially a violation of the Act.

The 14-Day Waiting Period

After you receive the disclosure document, you must wait at least 14 days before signing any franchise agreement or paying any money. This is a statutory cooling-off period — it exists so you can have the document reviewed by a lawyer before committing.

Do not let a franchisor or their sales representative pressure you into waiving or shortening this period. Rushing the review process is one of the surest signs that something is wrong.

What Happens If Disclosure Is Deficient?

If a franchisor fails to provide a disclosure document, provides one that is materially incomplete or misleading, or does not provide it at least 14 days before signing, the franchisee has a right of rescission — the right to cancel the franchise agreement and receive a refund of all money paid, including the franchise fee.

The right of rescission must be exercised within a specific period set out in the Act (as of writing — verify current timelines). If the disclosure document was never provided at all, the rescission window is longer. Timing matters enormously; get legal advice immediately if you believe disclosure was deficient.

Red Flags to Watch For

Even a technically compliant disclosure document can reveal serious problems:

• High franchisee turnover. If the list of former franchisees is long relative to current franchisees, ask why.
• Unaudited or incomplete financials. A franchisor whose financials are missing or qualified by auditors may not be financially stable.
• Very broad "material change" carveouts. Some agreements allow the franchisor to change the system significantly without your consent. Understand what you are agreeing to.
• Onerous territory clauses. Exclusive territory (or the absence of one) dramatically affects your revenue potential. Understand exactly what "exclusive" means and what "protected" means — they are not always synonymous.
• Personal guarantee requirements. Many franchise agreements require a personal guarantee. This means your personal assets are on the hook if the franchise fails.
• Renewal and transfer fees. A low initial franchise fee can mask expensive renewal and transfer fees buried elsewhere.

The Duty of Fair Dealing

The Arthur Wishart Act imposes a duty of fair dealing on both parties throughout the relationship — not just at signing. This has practical implications: if a franchisor arbitrarily denies consent to an assignment or renewal, refuses to provide promised support, or treats franchisees differently based on improper reasons, there may be a legal remedy. Keep records of communications with your franchisor.

Frequently asked questions