Franchise law in various Canadian provinces recognizes the importance of franchisees receiving as much information as possible before binding themselves to a franchisor who holds considerably more power in the business relationship. Currently, the provinces of Ontario, Alberta, Prince Edward Island, New Brunswick and Manitoba, have franchise legislation in place to protect the need for franchisees to make educated investment choices.
“The purpose of the franchise disclosure document – a compendium of information about the franchise system which franchisors are required to provide to franchisees operating businesses in those particular provinces. The legal requirement to deliver a disclosure document is not taken lightly, and a franchisee’s right to receive one prior to signing a franchise agreement cannot be waived by a franchisee.
Where a disclosure document is delivered incorrectly, fails to comply with the required level of information mandated by law to be disclosed or is not provided at all to a franchisee, that franchisee may have either 60 days or up to two years from the date a franchise agreement was signed to “rescind” or undo its franchise agreement and have the bulk of its investment returned and losses compensated.”