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Franchise law is a broad and important area of our practice. We are here to provide you with the right legal guidance and ensure you understand what your franchise agreement means.
No matter where you are in the franchising process, we can help support the success of your franchise business.
WHAT IS A FRANCHISE?
A franchise is a business agreement that gives an operator of the franchise (the franchisee) the right to use the franchise’s proprietary knowledge to sell a product or service. The franchisee buys into a franchise in order to access a well-established business model that typically includes branding and trademarks, intellectual property, processes, and other proprietary knowledge that the franchisor has developed.
A franchise can be compared to a commercial leasing or licensing agreement. As a franchisee, you don’t own the company but are permitted to operate a business with the franchise system for a specific time period. Franchises can take many different forms, for example, fast-food restaurants, convenience stores, hotels, or fitness centres.
A franchise is a popular way to start a business. For the franchisor, it’s also a cost-effective way to expand the business and increase market share.
WHAT IS A FRANCHISE AGREEMENT?
A franchise agreement is a binding contract that sets out the relationship between the franchisor and the franchisee. This agreement includes the terms and conditions for buying into, operating the franchise, and renewing the franchise agreement.
In Alberta, the franchisor is required to provide a prospective franchisee with a franchise disclosure document at least 14 days before the franchise agreement is signed or the first payment is made. The disclosure document contains copies of all franchise agreements, financial statements for the franchise, and information about the franchisor and management of the franchise business. It is up to the franchisee to thoroughly review the disclosure documents and franchise agreement to make sure they understand what they mean before buying into the franchise
HOW CAN A FRANCHISE LAWYER HELP?
Whether you are thinking about franchising your business, buying into a franchise, looking to purchase a franchise, or you’re operating a franchise business, a franchise lawyer can provide valuable legal advice.
In Canada, franchising is regulated at a provincial level. That means if you’re operating a franchise in Alberta, provincial franchise legislation applies, whereas there are different local regulations in Ontario and Quebec, for example.
Franchising can quickly become complex, and a franchise lawyer can help you navigate through the relevant laws, legal pitfalls, and risks. Sound legal advice is the best way to protect you against expensive legal problems, issues in the long-term, and ensure you understand the risks and benefits of the specific franchise opportunity.
In addition to the franchise-specific legal services, a lawyer can also help you start up and run your new franchise or franchised business.
If you’re looking to buy a franchise, it’s important to get legal advice from an experienced franchise lawyer. A lawyer can help guide you through the process of becoming a franchisee and prevent the pitfalls along the way.
OUR FRANCHISE LEGAL SERVICES
For both franchisees and franchisors, Navigator Law can help with all aspects of running your business. Drawing from other practice areas such as business law, tax law, and commercial real estate law, we offer well-rounded legal advice and services.
Whether you are a franchisor or a franchisee, our team of knowledgeable lawyers can help with any type of franchise transaction.
For a franchisor, we can help:
For a franchisee, our legal services include:
Operating a Franchise Business
To help you get a competitive advantage, we can help you set up the right corporate structure, maximize tax efficiency, and ensure you have access to advantageous financing.
As a new or existing business owner, we offer full-service legal support with setting up and running your franchise business. Our experienced team of lawyers can help with any aspect of your business from start to finish.
Take advantage of our legal services to support the success of your franchise business.
Sometimes, disputes can arise between the franchisor and franchisee or other parties, including franchise default and termination. Navigator Law offers arbitration and alternative dispute resolution to our clients who are involved in a legal dispute.
If these methods can’t resolve the dispute, we are able to provide franchise and commercial litigation, including representing you in court.
No matter the nature of your dispute, we will work diligently to find a practical and economical solution that meets your needs and interests.
Navigator Law, LLP offers effective, knowledgeable legal advice and services for all types of franchise matters. Contact our law office today to make an appointment or learn more about how we can help with your franchise.
FREQUENTLY ASKED QUESTIONS
A franchisor is required by Canadian law to disclose all ‘material facts’ about the franchise, including financial and business information to a potential franchisee. The franchisee must receive disclosure documents before making any payments to the franchise or signing a franchise agreement. The Canadian Franchise Association is a great source of information for potential franchisees.
In Alberta, if you didn’t receive a franchise disclosure document before buying into the franchise or signing a franchise agreement, you can cancel your franchise agreement. You can cancel the franchise agreement 60 days after receiving the disclosure document or within 2 years of becoming a franchisee.
Under normal circumstances, a franchise agreement is a legally binding contract. The agreement will outline what penalties the franchisee will have to pay to terminate the franchise agreement early.
If you have not received adequate disclosure documents before entering into a franchise agreement, you can cancel the agreement by giving the franchisor notice of rescission. The franchisor then must pay back any start-up fees within 60 days of receiving the notice.
A typical franchise term runs between 5 and 10 years. Often, the franchisee has the right to renew the agreement for 1 term, multiple terms, or even indefinitely. If the franchise agreement doesn’t include a right to renew, you could be offered a renewal of your franchise agreement, but there are no guarantees.
The franchise agreement will include requirements for renewal, for example renewal fees or updates to the business. In order to renew the franchise agreement, the franchisee must give a notice to renew within a specific time period, or the agreement will expire. Depending on the specific agreement, the franchisor might be able to change the royalty and fee amounts when the franchise term ends. A franchise lawyer can help administer the franchise renewal process and review and negotiate the franchise agreement. .
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