Underneath the Golden Boy - Robson Hall Faculty of Law

Franchise Law Consultation Paper 2007 285
• information respecting the parents, predecessors, affiliates and
associates of the franchisor;
• bankruptcy and insolvency proceedings relating to officers,
directors and partners with management responsibilities;
• franchisee support resources and methods;
• policies respecting security interests and guarantees;
• gross-up provisions to compensate foreign franchisors for the
cost of royalty withholding tax;
• repeated sales of the same franchised outlet;
• where the franchisor receives a rebate or benefit from a
required supplier, the source of the benefit and how the
benefit is calculated;
• whether the franchisor or any officer of the franchisor has an
interest in a required supplier.
(b) Wrap around disclosure document and substantial compliance. Alberta
and PEI allow franchisors to use disclosure documents that are acceptable in
other jurisdictions with ‘wrap around’ material to comply with the province’s
requirements. These jurisdictions also provide that a disclosure document
complies with the legislation if it is ‘substantially complete’.
(c) Exceptions for confidentiality, site selection or refundable deposit
agreements.
Disclosure documents must be delivered to a prospective franchisee 14 days
before the signing of an agreement relating to the franchise or the payment of
consideration relating to the franchise. All Acts except Ontario’s exempt
confidentiality and site selection agreements from the disclosure requirement;
the Alberta Act also exempts fully refundable deposits. Should franchisors be
able to require a refundable deposit or enter into a confidentiality or site
selection agreement with a franchisee before providing disclosure
2. Exemptions
In Alberta and under the New Brunswick Bill, regulations may be made to
provide for exemptions from any or all provisions of the Act or regulations. The
Ontario and PEI Acts authorize regulations to be made exempting certain
franchisors from the requirement to include financial statements in a disclosure
statement. As well, under the PEI Act, any franchisor may apply to the Minister
for an exemption from the requirement to disclose financial statements. The
Minister may exempt the franchisor, subject to any terms and conditions, if
satisfied that to do so would not be prejudicial to the public interest.
Regulations have been made in Alberta, Ontario, and PEI to exempt
‘mature franchisors’ from the requirement to include financial statements in a
disclosure statement. Mature franchisors may be expected to provide more stable