Buying a Franchise in Canada: Get Promises Written into the Contract

Reduced fees, equipment included in the price or a ‘turnkey’ opening service can influence your decision to buy a franchise. But a sales promise may not carry the weight you expect. To join a franchise network on clear terms, identify the commitments that matter most and have their contractual wording checked before you sign.

1. Keep a record of promises

During discussions with the franchisor, record any statements that influence your decision. Keep emails, presentations, proposals and meeting notes, together with their dates and details of who produced them. After an important conversation, send a written summary and ask for confirmation.

Distinguish between three categories: general descriptions of the business concept, estimates and specific commitments. ‘Our process makes opening easier’ does not promise the same outcome as ‘we will arrange and pay for the delivery and installation of the equipment listed in the schedule’.

For each key commitment, record:

• what must be supplied or done;
• which company is responsible;
• the agreed date or milestone;
• any stated conditions and exclusions;
• the document in which the commitment appears.

The Government of Alberta’s information sheet for prospective franchise buyers recommends getting the franchisor’s promises in writing. This is a useful precaution throughout Canada: it helps you compare what you have been offered with what you are actually buying.

2. Turn vague wording into obligations you can verify

Putting something in writing is not enough if the wording remains unclear. An offer referring to ‘equipment included’ should identify the equipment, its condition, who owns it and any costs that are excluded. Do not assume that transport, installation or commissioning will be free.

Take a promise to waive certain fees temporarily. Ask which fees are covered, when the period begins, what conditions apply and whether the amounts are permanently waived or merely deferred. A fee reduction and a payment deferral do not have the same financial effect.

Next, ask for clarity on what happens if a promised service is not delivered. Does the contract provide for an extension of time, a refund or another remedy? These arrangements need to be negotiated; do not assume they apply automatically.

Your accountant can assess the financial significance of each commitment. If your budget depends on a free service that has not yet been confirmed, also calculate the cost of having to pay for it yourself. This will help you identify which promises must be clarified before you make your decision.

3. Check that the documents are consistent and establish which law applies

Ask your independent lawyer to compare your record of promises with the contract, its schedules and the disclosure document, where one is required. A favourable sales letter may conflict with a clause that ultimately makes you responsible for all costs.

Pay particular attention to the entire agreement clause: this generally seeks to define which documents make up the agreement between the parties. Also have your lawyer review clauses dealing with earlier representations and the order of precedence of documents. Their effect depends on the wording and the applicable law; they do not necessarily override statutory protections.

In Canada, franchise-specific rules are set at provincial level. In Ontario, the Arthur Wishart Act (Franchise Disclosure), 2000 requires, subject to applicable exceptions, a disclosure document to be provided at least 14 days before a franchise-related agreement is signed or a payment is made. It also requires disclosure of material changes before the transaction is concluded. You should therefore tell your lawyer if a key promise changes, so they can assess the implications for disclosure.

In Quebec, there is no specific legislation imposing a franchise disclosure regime. The general provisions of the Civil Code of Québec apply, including those concerning good faith, consent and contractual obligations. The absence of a specific regime does not mean that sales representations have no legal consequences.

4. Resolve outstanding points before signing

Ask for a final version incorporating the agreed commitments, either in the contract itself or in a signed schedule whose status within the agreement is clear. Check that the correct legal entity is making the commitment and that its representative has authority to do so.

If the franchisor refuses to formalise a promise, ask why. It may be only an estimate, a conditional service or a benefit they do not intend to guarantee. Reassess the purchase without relying on that benefit.

Key takeaway: no promise essential to your decision should remain unclear. Keep a record of it, make its terms precise and have its legal effect checked before signing or making any payment that commits you.