- A closing condition tied to third-party consent is only useful if the purchase agreement also says what happens when the condition isn't met.
- The simplest option, if the agreement includes a mechanism for it — often a defined number of days, sometimes renewable, sometimes capped at an outside date after which either party can…
- Because these two consent types behave differently, a purchase agreement that treats "third-party consent" as one generic bucket can miss important distinctions.
The closing date is circled on the calendar, both sides are ready to sign, and then it happens: the landlord still hasn't responded to the consent request, or the franchisor's approval process is taking longer than anyone expected. This scenario is common enough in Ontario business sales that a good purchase agreement should already tell you what happens next — the question is whether yours actually does.
This article works through the practical options when a required consent hasn't arrived by the scheduled closing date, how landlord and franchisor consents tend to behave differently, and how to draft the closing condition itself so you're not stuck improvising under time pressure.
Why This Needs an Answer Before You Sign, Not After
A closing condition tied to third-party consent is only useful if the purchase agreement also says what happens when the condition isn't met. Too many agreements state that consent is "a condition to closing" and stop there, leaving the parties to negotiate from scratch — under time pressure, with a moving company or a nervous lender waiting — exactly when they have the least leverage to do it calmly. The fix is to build the "what if" into the agreement itself, before anyone knows whether it will actually happen.
The Options When a Consent Hasn't Arrived by the Scheduled Date
- Extend the closing date. The simplest option, if the agreement includes a mechanism for it — often a defined number of days, sometimes renewable, sometimes capped at an outside date after which either party can walk away.
- The buyer waives the condition. Since the buyer is generally the party protected by a consent condition, the buyer usually holds the right to waive it and proceed without that particular contract in hand — accepting the risk that the consent may never come.
- Carve out the affected contract. The deal closes on everything else, while the parties agree to a temporary arrangement (such as the seller continuing to hold the lease and subletting informally, where permitted) while consent is pursued afterward.
- Adjust the purchase price. If a specific contract's value turns out to be at risk, the parties may agree to reduce the price or place a holdback in escrow tied to that contract's eventual transfer.
- Terminate the agreement. If the consent was truly essential — a lease for the only location, or a franchisor's approval without which the business can't legally operate — either party may have the right to walk away, depending on how the condition and its consequences were drafted.
Which of these actually applies to your deal depends entirely on the wording the parties agreed to at signing — none of it is automatic.
Landlord Consent vs. Franchisor Consent: Different Dynamics
| Landlord Consent | Franchisor Consent | |
|---|---|---|
| Statutory backdrop | Ontario's Commercial Tenancies Act deems consent not to be unreasonably withheld, unless the lease says otherwise | No equivalent statutory "reasonableness" standard — governed by the franchise agreement and the franchisor's own process |
| Typical friction point | Landlord wants financial disclosure, a personal guarantee, or an administrative fee before agreeing | Franchisor's internal approval process (financial vetting, training requirements) can simply take time |
| Related legal question | Whether refusal is "unreasonable" under the lease and the Act | Whether the resale triggers a fresh disclosure obligation under the Arthur Wishart Act — a separate, fact-specific question that shouldn't be assumed either way |
| Leverage if delayed | The Act's deemed-reasonableness protection may support pushing back on an unreasonable refusal | Limited leverage beyond the franchise agreement's own terms; often more about patience and preparation than legal pressure |
Because these two consent types behave differently, a purchase agreement that treats "third-party consent" as one generic bucket can miss important distinctions. It's usually worth addressing landlord consent and franchisor consent as separate, specifically named conditions rather than folding them into a single vague clause.
Drafting the Closing Condition So You're Not Stuck
- [ ] Name the specific consents required (landlord, franchisor, lender, key supplier) rather than using a generic catch-all.
- [ ] Specify who is responsible for pursuing each consent, and to what standard of effort (commercially reasonable efforts is common).
- [ ] Build in a defined extension mechanism, including any outside date after which either party can terminate.
- [ ] State explicitly who holds the right to waive the condition if it isn't met.
- [ ] Decide in advance whether a missing consent triggers a price adjustment, a carve-out, or termination — and say so in the agreement, not just in conversation.
Frequently asked questions
If the landlord just refuses to respond, can we still close?
It depends entirely on how the purchase agreement handles a non-response, since silence isn't automatically treated as consent or refusal. A well-drafted agreement anticipates this by including a deadline after which the buyer can choose to waive the condition, extend, or walk away — rather than leaving the parties waiting indefinitely.
Who decides whether to waive a missing consent — the buyer or the seller?
Typically the buyer, because the consent condition is usually there to protect the buyer from taking over a contract it can't rely on. The seller generally can't force the buyer to proceed without a consent the buyer specifically bargained for as a condition.
Does a share sale ever run into this same problem?
Less often, because the corporation itself doesn't change hands in a way that usually triggers assignment or consent requirements for its existing contracts. It can still arise if a specific lease, loan, or franchise agreement defines a change in share ownership as triggering its own consent or default clause — worth checking rather than assuming away.
What if the franchisor's approval takes much longer than expected?
This is a common friction point precisely because franchisor approval processes aren't subject to the same statutory reasonableness standard that applies to landlords under the Commercial Tenancies Act. Building a realistic timeline — and a fallback plan if it runs long — into the agreement from the outset avoids a last-minute scramble.
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