Cancelling a Franchise Agreement in Alberta: Timing and Steps

Signing a franchise agreement often happens quickly, and doubts can follow just as fast. You may have been given little or no disclosure, received documents late, or discovered that the business is not what you were told. You may be wondering whether you can still get out.

The answer depends on the facts: what you were given, when, and what you have done since. This article explains the general idea of rescission, why timing matters, what to gather, and how registry searches can help you learn about the franchisor. A lawyer can confirm your specific deadlines.

This article covers the law of Alberta.

What rescission means

Rescission means cancelling an agreement and trying to put both sides back where they were before it was signed. In a franchise setting, that usually involves ending the agreement and dealing with money you paid and anything you received.

Whether you have this right, how long it lasts, and what the franchisor must return all depend on the law that applies to your franchise and on what disclosure you were given. Those details are worth confirming with a lawyer before you rely on them.

Why timing matters

Whether a cancellation right exists, and how long it lasts, depends on the law that applies and on your facts, such as when you received any disclosure document and when you signed. Because this varies, it is worth confirming your dates with a lawyer rather than assuming how much time you have.

• Note the date you signed and the date you paid any deposit or fee.
• Note the date you received any disclosure document, and whether it arrived before or after signing.
• Avoid actions that suggest you accept the deal, such as opening for business, until you have advice.
• Do not stop paying or walk away without advice, since that can create problems of its own.

Gather your records

• The signed franchise agreement and every schedule.
• Any disclosure document, with proof of when and how it was delivered.
• Receipts, cheques, e-transfers and bank statements for money paid.
• Emails, texts and brochures showing what was promised about income, support or territory.
• Names of anyone who spoke with you for the franchisor, and notes of what they said.
• Any personal guarantee or loan documents you signed.

Keep originals safe and work from copies. Write a short timeline in your own words while your memory is fresh.

Learn about the franchisor

Registry searches can help you see who you are dealing with. Alberta Corporate Registry searches are requested through a registry agent. Current and historical searches can show the registration date, owners, directors and legal addresses of Alberta and extra-provincial corporations, partnerships, trade names and incorporated non-profits.

The Corporate Registry options are a certified current search, a certified historical search, a certificate of status, a historical certificate of status, and certified copies of information, transactions and attachments.

A certificate of status confirms status as of a given date only, and a historical certificate of status confirms status as of a past date. Certificates of status are not available for trade names and partnerships, so if the franchisor operates as one of those, a certificate will not be an option.

A Personal Property Registry search by business debtor name can show whether lenders have registered interests against the franchisor. The result may be an exact match, an inexact match, no match, or both exact and inexact matches. This matters if you hope to recover money, because a franchisor with heavy debts may be harder to collect from.

Personal Property Registry searches can also be run by individual debtor name, serial number, registration number, distribution seizure, or certificate of expired or discharged registration (form REG3329). Each is requested on a Search Request form submitted at any registry agent office in Alberta. For inexact matches, you may need to search the inexact name again or search the specific registration number, and questions about a result go to the party that registered the interest.

Registry results show only what has been registered. They do not tell you whether you can cancel, so treat them as background that a lawyer can help you interpret.

What to do next

• Collect the records above and build your timeline today.
• Do not sign anything new, including a release, until you have advice.
• Speak with a lawyer promptly so your deadlines can be checked against your dates.
• Ask any lender or guarantor-related questions at the same time, since loans may be affected by cancellation.
• Ask which registry searches are worth doing for your franchisor, and keep copies of the results.
• If you send a notice, keep proof of how and when it was sent.

Frequently asked questions