Franchising in Quebec: spotting abusive clauses

Buying a franchise in Quebec often means receiving an agreement largely drafted by the franchisor. Standardisation helps a franchise network operate consistently, but it does not put every clause beyond challenge. Before signing, one question deserves particular attention: is the agreement a contract of adhesion, and could any of its provisions be abusive? Answering this requires more than a review of fees and commercial obligations.

1. Establish whether the agreement is genuinely negotiable

Quebec has no franchise-specific legislation imposing a general pre-contractual disclosure regime comparable to those in some other Canadian provinces. The general provisions of the Civil Code of Québec, particularly those relating to contracts and good faith, apply to the relationship between franchisor and franchisee.

Article 1379 of the Civil Code defines a contract of adhesion as one whose essential terms are imposed or drafted by one party and cannot be freely negotiated. A franchise agreement may meet this definition, but it does not automatically do so.

Signing a standard-form document is therefore not enough, on its own, to settle the question. Conversely, securing a minor concession does not necessarily show that the essential terms were negotiable.

Keep evidence showing how the process unfolded:

• successive versions of the agreement;
• your requests for amendments and the responses received;
• emails stating that certain provisions are non-negotiable;
• proposals specifying what is genuinely open to discussion.

Ask your lawyer to assess the agreement’s legal classification on the basis of these facts, rather than relying solely on its title or a statement that all terms were negotiated.

2. Distinguish a demanding clause from an abusive one

Article 1437 of the Civil Code provides that an abusive clause in a consumer contract or a contract of adhesion may be declared null, or the obligation arising from it may be reduced. For a prospective franchisee, classification as a contract of adhesion is particularly worth examining: buying a business does not automatically make you a consumer.

A clause is not abusive simply because it is costly or favours the franchisor. The legal test concerns a provision that disadvantages the adhering party in an excessive and unreasonable way, contrary to the requirements of good faith. The assessment takes account of the agreement and its context.

Pay particular attention to provisions that could:

• impose a very broad indemnity on you, even for events beyond your control;
• allow the franchisor to make substantial changes to your obligations without clear limits;
• transfer risks to you with no obvious connection to your own operations;
• impose financial consequences that appear disproportionate to a breach.

These are reasons for closer scrutiny, not proof of illegality. Ask what commercial purpose justifies each provision, then whether its scope goes beyond what appears necessary to serve that purpose.

3. Check cross-references and unclear wording too

An important obligation may appear in a schedule, policy or other document referred to in the agreement. Article 1435 of the Civil Code governs external clauses. In a contract of adhesion, such a clause may be null if it was not expressly brought to the adhering party’s attention when the contract was formed, unless the other party proves that they otherwise knew about it.

Ask for all documents incorporated into the agreement before committing yourself. Record their titles, versions and the dates you received them. A cross-reference alone does not allow you to assess an obligation whose content you do not know.

Article 1436 also addresses certain clauses in contracts of adhesion that are illegible or incomprehensible to a reasonable person and cause harm, subject notably to whether adequate explanations of their nature and scope were given.

If a passage is unclear, ask for a written explanation and a practical example of how it would apply. The aim is not to preserve an ambiguity for possible litigation: it is to understand exactly what you are accepting.

4. Turn your assessment into a decision before signing

Work with an independent lawyer to prepare a simple table setting out the clause concerned, the specific risk, the franchisor’s explanation and your proposed amendment. Prioritise provisions that could put your assets or the viability of the business at risk.

Depending on the issue, propose a cap, a limitation to losses directly caused by your fault, objective criteria or a requirement for written consent to certain changes. These are possible negotiating points, not automatic legal entitlements.

Do not sign on the assumption that a court will later strike out an unfavourable clause. The outcome of a challenge remains uncertain, and proceedings can be expensive. If an essential obligation remains unclear or unacceptable, postponing the purchase may be wiser than relying on legal action.

Key takeaway: before joining a franchise network in Quebec, document what was negotiable, obtain all applicable documents and have potentially unbalanced clauses reviewed. Legal protection complements caution before signing; it does not replace it.