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Canadian Franchise

Written by: Cynthia Gleeson

Article Overview: You might think that opening a Subway franchise in Canada would be the same as in the U.S., but I’m afraid I have to be the bearer of bad news: It’s not! It’s not even the same from province to province. For those of you who are looking to the Great White North to invest, you need to be aware of the different laws and processes in place before you can be on your merry Canadian franchise way.

Canadian Franchise

You might think that opening a Subway franchise in Canada would be the same as in the U.S., but I’m afraid I have to be the bearer of bad news: It’s not! It’s not even the same from province to province. For those of you who are looking to the Great White North to invest, you need to be aware of the different laws and processes in place before you can be on your merry Canadian franchise way.

First of all, it is important to understand the various provincial legislation that surround opening franchises in Canada. As of now, only three out of the ten provinces have franchise disclosure laws: Ontario’s Arthur Wishart Act (2000), Alberta’s Franchises Act (1995), and Prince Edward Island’s Franchises Act (2006). There is pending franchise legislation in New Brunswick.

What that means is that in those three provinces, franchisors are legally required to provide prospective franchisees such as yourself with all of the information relevant to the company that you would need in order to make your informed buying decision. So, in all of Ontario, Alberta, and Prince Edward Island, you are legally entitled to obtain not only all of the general information about your prospective franchisor, but also all of its financial information and other such things as litigation cases, at least 14 days before you make any arrangements. In the other seven provinces, no such guarantee is provided.

If the franchisor does not disclose the information to you within the proper time, or if the disclosure document does not contain the required information, you have the right to cancel any agreements that were made within certain time restrictions. You will then have the right to get a refund for any money you might have given the franchisor, who will also be required to purchase back from you any inventory or equipment you bought from them. However, when you are looking at establishing a Canadian franchise, there are also a number of non-franchise related federal laws that you need to be aware of.

Federal legislation that will affect your franchise in Canada include the Competition Act, which deals with price fixing, and the Consumer Packaging and Labeling Act. The North American Free Trade Agreement would also be of particular importance for an American-based franchisor when it comes to such things as sending training personnel to its Canadian outlets and any restrictions on those business visits.

This is by no means a complete outline of all the laws you will come into contact with when establishing a franchise outlet in Canada. You need to also be aware of the unique context of doing business in Quebec. But, what I hope to have accomplished here is to alert you to the importance of understanding the differing provincial and federal regulations of opening a franchise.

Don’t let the complex nature of franchise legislation scare you aware though; opening a Canadian franchise can be a lucrative and personally satisfying venture. Now, it’s just the weather that you need to come to grips with!

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