- A franchisor must give you its disclosure document at least 14 days before you sign the franchise agreement or any related agreement, or pay any consideration.
- The disclosure must be accurate, clear and concise, and the government does not review or approve it.
- If disclosure arrives late or incomplete, you can have a right to cancel within 60 days of receiving the document, and if you were never given a disclosure document, within two years of entering the franchise agreement, so slow down and get advice before you commit.
You have found a franchise you like, and the franchisor is pushing you to sign or pay a deposit to hold your spot. Before you do, Ontario law gives you a built-in pause so you can read what you are buying.
People often call this a cooling-off period. It is better understood as a waiting period tied to the disclosure document. This article explains how it works and why moving too fast can cause trouble for both sides.
What the 14-day rule says
Under the Arthur Wishart Act (Franchise Disclosure), 2000, the franchisor must give you its disclosure document at least 14 days before you sign the franchise agreement or any related agreement, or pay any consideration.
The wait protects you on two fronts: signing and paying. The disclosure document must cover background, litigation and bankruptcy history, financial statements, offering costs, draft agreements and current and former franchisees. Whether a particular payment you are asked to make counts as consideration depends on your situation, so it is worth confirming with a lawyer.
What the disclosure document must cover
The document is meant to let you make an informed decision. It must cover the franchisor's background, litigation and bankruptcy history, financial statements, offering costs, draft agreements, and information about current and former franchisees.
The information must be accurate, clear and concise. The government does not review or approve franchisors or their disclosure documents, so the government is not checking the document before it reaches you.
Changes during the waiting period
The franchisor must also disclose any material change before you sign or pay. A material change is one that could reasonably be expected to have a significant negative effect on the value or price of the franchise or on your decision to buy.
If something important shifts while you are reviewing the documents and the material change statement is late or deficient, you can cancel without penalty within 60 days of receiving it.
Why signing or paying early creates problems
If disclosure is late or deficient, a franchisee can cancel without penalty within 60 days of receiving the disclosure document or material change statement. If no disclosure document was ever provided, the franchisee can rescind within two years of entering the franchise agreement.
That is a risk for the franchisor, but it is also a risk for you. A dispute over cancelling can be stressful, and getting your money back is not instant. After a valid rescission the franchisor has 60 days to return your money. You are better off using the waiting period properly than relying on a remedy later.
- Do not pay a deposit or any other amount in the meantime.
- Be cautious about pressure such as a limited-time discount or a claim that another buyer is waiting.
What to do during the 14 days
Treat the period as working time, not waiting time.
- Note the date you received the disclosure document and keep proof of delivery.
- Read the financial statements, litigation history and draft agreements closely.
- Ask for a copy of every agreement you will be asked to sign.
- Contact current and former franchisees listed in the document.
- Have a lawyer review the documents, and an accountant review the numbers.
- Write down any promises made verbally and ask for them in writing.
Frequently asked questions
Is the 14-day period a right to cancel after I sign?
No. Cancellation rights arise separately if disclosure is late, deficient or missing.
Can I pay a deposit before the 14 days are up?
The franchisor must give you the disclosure document at least 14 days before you pay any consideration, as well as before you sign. If a deposit is requested earlier, get legal advice before paying.
Does the government approve the disclosure document?
No. The government does not review or approve franchisors or their disclosure documents, though the information must still be accurate, clear and concise. That makes your own review, and your lawyer's, important.
What if the franchisor changes something during the 14 days?
The franchisor must disclose a material change before you sign or pay. If you receive a change late, you may have the 60-day rescission right for a late or deficient statement.
Sources
Links go to official government, court and regulator pages. The law changes — confirm you are reading the current version.
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