Underneath the Golden Boy - Robson Hall Faculty of Law

258 Underneath the Golden Boy
The disclosure must be in a single document, delivered as one document at
one time, and include the information required under the regulations. The
document must contain all material facts 120 (in Ontario and PEI, including all
material facts ‘as prescribed’) and must be accurately, clearly and concisely set
out. ‘Material fact’ is defined to include any information about the business and
operations of the franchise that would reasonably be expected to have a
significant effect on the value or price of the franchise or the decision to acquire
the franchise.
The information required to be disclosed under the regulations made under
the various Acts includes, in part: 121
• the background of the franchisor (business name and details, length of
time in business and number of franchises sold in the preceding five
years);
• the background of the officers and directors of the franchisor (prior
relevant experience, length of time in business and principal occupation
during the preceding five years);
• the litigation history of the franchisor (convictions within the 10
preceding years for fraud, unfair or deceptive business practices or
violations or pending charges relating to franchise or business laws,
administrative orders or penalties or pending administrative actions,
findings of liability and pending civil actions relating to business
practices);
• the details of a bankruptcy or insolvency proceeding within the
preceding six years;
• the most recently completed financial statements audited or reviewed
in accordance with generally accepted standards that are at least
equivalent to those in the Canadian Institute of Chartered
Accountants Handbook (the accounting standards of other
jurisdictions are acceptable so long as they meet the standards);
• the costs of establishing the franchise and, if operating costs are
provided, the supporting assumptions and information;
120
In Alberta the requirement to disclose all material facts is set out by defining a
‘misrepresentation’ as an untrue statement of or an omission to state a material fact.
121
In some cases, the time periods for which information must be provided are fiscal years rather
than calendar years. See also R.D. Leblanc and P.M. Dillon, “Franchise Disclosure in Canada
in 2007 and Beyond” (Paper presented to The Domino Effect: 6 th Annual Franchising
Conference, Ontario Bar Association, November 16, 2006) for a comprehensive comparison of
the disclosure requirements.