Franchisee List in the Franchise Disclosure Document

Beginning a new franchise can be extremely challenging, making the professional advice of a franchise lawyer invaluable.

Contact Neufeld Legal PC for franchising legal matters at 403-400-4092 / 905-616-8864 or Chris@NeufeldLegal.com

The Franchisee List is a critical component of the franchise disclosure document that prospective franchisees should be taking full advantage of as they evaluate a particular frachise opportunity, such that they might attain insights from existing franchisees, which might include potential challenges and concerns with that particular franchise system.

The regulations for the franchise disclosure document vary slightly by province, but in the provinces with franchise legislation (British Columbia, Alberta, Manitoba, New Brunswick, Ontario, and Prince Edward Island), the franchise disclosure document must contain a list of:

• All current franchisees in Canada: This list typically includes their name, business address, and telephone number. Some provinces may require the names of principals if the franchisee is a corporation.

• Franchisees who have left the system in the last year: This is an important piece of information that can provide insights into franchise turnover and potential issues within the system.

The purpose of this list is to give the prospective franchisee the opportunity to contact existing and former franchisees. This is a critical step in the due diligence process, as it allows a prospective franchisees to ask questions about:

• The franchisor's support and training.

• The accuracy of any earnings claims.

• The franchisor's relationship with franchisees.

• Any unexpected costs or challenges they faced.

• Their overall satisfaction with the franchise system.

Provincial franchise legislation was intended to protect franchisees, with the Franchisee List being one of the few items that franchisors have not been able to manipulate to twist franchise disclosure requirement to advance the franchisor's interests. Failure to provide a complete and accurate franchisee list may result in the franchisee having the right to rescind the franchise agreement.

Christopher Neufeld is a business lawyer knowledgeable in the rigors and challenges of the franchise business, together with the legal constructs that are critical to their effective operation. For experienced legal representation in starting, acquiring / selling, operating and managing a franchise, contact franchisee lawyer Christopher Neufeld at 403-400-4092 [Alberta], 905-616-8864 [Ontario] or Chris@NeufeldLegal.com.

The Basics to Becoming a Franchisee: Embarking on the path of becoming a successful franchisee demands an incredible amount of time and effort, given that there are only a limited number of truly successful franchisees, with those that have set themselves apart and hit the pinnacle of franchise operations and profitability. This begins with understanding the core concepts of a business franchise. Read more.

 

Key Aspects of a Franchise Disclosure Document: A Franchise Disclosure Document is a crucial legal document in Canada that provides a prospective franchisee with essential information about a franchise system. The franchise disclosure document is intended to help the potential franchisee make an informed investment decision. Read more.

 

Key Aspects of a Franchise Agreement: A franchise agreement is a legally binding contract that governs the relationship between a franchisor and a franchisee, which is drafted strongly in favour of the franchisor (as they are in a position to heavily dictate the franchise arrangement that they offer to prospective franchisees). While the specifics can vary, there are several key aspects that are almost always included. Read more.

 

Contact us via email at chris@neufeldlegal.com or call 403-400-4092 / 905-616-8864.