What the Arthur Wishart Act (Franchise Disclosure), 2000 requires a franchisor to give you, when the 14 days run, and what happens if the rules are broken.
⚖️ This is general information, not legal advice. It can't account for your specific situation. Use it to get oriented, then confirm the details with a licensed Ontario lawyer.
Ontario regulates franchising through one statute, the Arthur Wishart Act (Franchise Disclosure), 2000, and one regulation, O. Reg. 581/00. The Act does not license franchisors or approve franchise systems. It does three things: it requires a disclosure document at least 14 days before you sign or pay, it gives you a right to rescind and to claim damages if disclosure is missing, late or wrong, and it imposes a duty of fair dealing on both sides. This guide explains the 14 days, what the document must contain, and the exemption that matters most when you buy an existing location.
When the 14 days run
Section 5(1): a franchisor must provide a prospective franchisee with a disclosure document, and the franchisee must receive it not less than 14 days before the earlier of (a) signing the franchise agreement or any other agreement relating to the franchise, and (b) paying any consideration to the franchisor or its associate relating to the franchise.
There are two carve-outs. An agreement that only requires confidentiality, prohibits the use of information, or designates a site or territory does not start the clock (s. 5(1.1)). A deposit does not count as consideration if it does not exceed the prescribed amount, is refundable without deduction and is given under an agreement that in no way binds you to enter into a franchise agreement. Anything else, including a non-refundable good-faith payment, either starts the clock or breaches it.
The document must be delivered as one document at one time, in a manner the Act permits. Piecemeal delivery does not count, and courts have treated seriously deficient documents as no disclosure at all, which opens the longer rescission period.
What the document must contain
- The franchisor's business background, its directors and officers, and their history
- Litigation, bankruptcy and administrative proceedings involving the franchisor and its associates
- All fees and costs: the initial fee, royalties, advertising contributions, required purchases, renewal and transfer fees
- Financial statements of the franchisor, prepared as O. Reg. 581/00 requires
- Copies of every agreement you will be asked to sign
- A list of current franchisees and of franchisees that left the system, with contact details
- Any earnings projections, together with their basis and assumptions
- Restrictions on suppliers, territory, resale and renewal
- A written statement of any material change since the document was prepared (s. 5(5))
If disclosure fails
Section 6(1): if the document was late or deficient, you may rescind the franchise agreement, without penalty or obligation, no later than 60 days after receiving it. Section 6(2): if no disclosure document was ever provided, you may rescind no later than two years after signing. Rescission is by written notice under s. 6(3). The franchisor must then refund what you paid, buy back inventory, supplies and equipment, and compensate you for the losses you incurred in acquiring, setting up and operating the franchise (s. 6(6)).
Section 7 gives a right to damages for any loss caused by a misrepresentation in a disclosure document or a statement of material change, or by a failure to comply with s. 5, against the franchisor, its agent, its broker, its associate and every person who signed the document. Section 11 makes any purported waiver or release of these rights void, so a franchisor cannot contract around them.
Buying an existing location
Section 5(7)(a) exempts the grant of a franchise by a franchisee where the franchisee is not the franchisor, its associate, or an officer, director or employee of either, the grant is for the franchisee's own account, and the grant is not effected by or through the franchisor. In practice the last condition decides. Where the franchisor's role is limited to consenting under the existing agreement, the exemption is likely available. Where the franchisor requires a new agreement on its current form, collects a transfer fee, screens and approves the buyer, or otherwise participates actively, courts have found the grant was effected through the franchisor and disclosure was required.
The safe course for a buyer is to ask for the current disclosure document regardless, read it, and let the 14 days run before signing anything the franchisor requires or paying anything that is not refundable.
Fair dealing and the right to associate
Section 3 imposes a duty of fair dealing on each party to a franchise agreement in its performance and enforcement, which includes a duty to act in good faith and in accordance with reasonable commercial standards. Section 4 protects a franchisee's right to associate with other franchisees, and a franchisor may not penalize or interfere with that right. Both continue to apply for as long as you own the franchise.
How Treadstone Law can help
The 14 days are a floor, not a target. Use them to read the document with your accountant and lawyer, call former franchisees on the list, and compare the location's numbers against the fees the system charges.
Treadstone Law handles corporate matters on a transparent flat fee, with online intake and a real lawyer on your file, across Ontario.
- Start your file online at treadstonelaw.ca/start-file
- See flat-fee pricing at treadstonelaw.ca/pricing
- Learn more about our corporate services at treadstonelaw.ca/corporate
- Or call us: 1-844-900-1070
This is not legal advice
This guide is general information, not legal advice. Reading it does not create a lawyer-client relationship. Ontario laws and government programs change, and how the law applies depends on your specific facts. For advice about your situation, speak with a licensed Ontario lawyer. Treadstone Law is licensed by the Law Society of Ontario — reach us at 1-844-900-1070 or start a file online.