How to Find State Specific Franchise Laws for Canada

Opening a franchise in connection with a company based in another country such as Canada brings into play franchise laws of the U.S. federal government, the Canadian government and (if applicable) the U.S. state in which your franchise is located. Keep in mind that just as each U.S. state has specific franchise laws, the provinces of Canada have specific franchise laws as well.

Instructions

1. Research the Canadian company you are considering purchasing a franchise from, as the laws of the province in which the company has its corporate office will control the process. Search the company's website to find the specific province they are incorporated in. This will likely be the province that regulates franchising for the company.

2. Be aware that in Canada, the Uniform Franchise Offering Circular (UFOC) is called the Disclosure Document. Like UFOCs in the U.S., the Disclosure Document must provide complete information about the franchise opportunity. You should read this over carefully several times to be sure you understand it fully.

3. Realize that Canada franchise law only requires the Disclosure Document in three provinces: Prince Edward Island, Alberta and Ontario. The U.S. requires the UFOC in 15 states. Each of these provinces has different rules that state exactly what information must be included in the Disclosure Document.

4. Read the Document Disclosure law online if you are opening a franchise or dealing with a franchisor in any of those three provinces. Find the Prince Edward Island Franchise Act, the The Alberta Franchises Act and the Ontario Franchise Act on the official government website for each province (see Resources below).

5. Make sure you receive the Disclosure Document at least 14 days before you transfer any of your funds or sign the Franchise Agreement if you're operating in the three provinces governed by Franchise Acts.

6. Take appropriate steps if you do not receive the Disclosure Document in a timely manner. If you receive it after the 14 days have passed, or if the Disclosure Document is incomplete or incorrect, you can cancel your Franchise Agreement within 60 days of obtaining it. If you never get the Disclosure Document at all, you can cancel the Franchise Agreement up to 2 years after you have signed it.

7. Ensure you are compensated by the franchisor if you need to terminate or cancel the Franchise Agreement due to problems with the Disclosure Document as described in the step above. If you purchased any inventory or other items from the franchisor, they must buy them back at the same price. Additionally, the franchisor must pay you back for losses you suffered related to the franchise.

8. Retain an international business attorney to help you understand the legal issues you may face when opening a franchise in Canada. While a lawyer is not required, hiring one may help you avoid legal pitfalls, and save you money in the long run.

Tips & Warnings

• Canada has two official languages, English and French. In some cases, your filings may need to be in both languages.