How to Start a Franchise in Canada
Starting a franchise in any jurisdiction is a challenging task. Franchises should only be started by businesses that are already successful and well-known, because franchisers are essentially selling their name and their business methods. In Canada, only the provinces of Ontario and Alberta have enacted specific franchise laws.
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Instructions
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Register all of your business trademarks with the Canadian Intellectual Property Office. An application and a fee of several hundred Canadian dollars are required. This process will take several weeks and must be completed by regular mail.
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Establish a wholly owned subsidiary in Canada specifically responsible for managing your Canadian franchising operations. Consider skipping this step if you expect your franchising operations to be small; Canadian law allows franchising operations to be managed from overseas.
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Draft a master franchise agreement. This document should be drafted under the supervision of an experienced Canadian intellectual property lawyer. It should specify exactly what rights are being transferred (licensing of trademarks and use of business methods, for example). It should also include stringent protections of your trade secrets and a confidentiality clause that prevents the franchisee from revealing the contents of the franchise agreement itself without your consent.
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Locate potential franchisees in Canada. The Canadian Franchise Association (CFA) can put its members in contact with many potential franchisees.Consider setting up a booth at a CFA-sponsored Franchise Show, which is held in various Canadian cities several times a year.
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Negotiate individual franchise agreements with franchisees. Remember that before signing franchisee agreements with franchisers located in Alberta or Ontario, you will have to submit certain legally required disclosure forms to them. Disclosure requirements are in some ways broader than in the United States.
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Tips & Warnings
Because of the prevalence of the use of the French language in Quebec, you might want to consider having all of your verbal trademarks translated into French and ensure trademark protection of the French language versions. Indirect translation should be considered because in some cases, a direct translation of a name or slogan into French might sound awkward.
The Canadian Intellectual Property Office will not patent business methods. Consequently, any business methods you wish to protect in Canada need to be kept as trade secrets. Although a well-drafted franchise agreement should protect you against unauthorized use of your business methods by franchisees (after abandoning the franchise, for example), if a third party legally obtains this information you will have few if any legal remedies available to you.
