Franchising

OUR GROUP

Miller Thomson’s Franchise Law Group understands the law and also the business of franchising. Our national team has extensive experience advising a wide range of established and emerging franchisors on matters spanning the development of franchise structures, compliance with disclosure obligation, dispute resolution, international expansion and complex financing, tax and regulatory advice. In addition, our group deploys a multi-disciplinary approach which draws upon the full breadth and depth of the firm’s expertise in all practice areas to meet our clients’ wide ranging needs.

OUR CLIENTS

Our team of lawyers represents franchising clients in all franchise sectors, including financial services, corporate training, retail, educational, food service, hospitality and commercial services.

OUR SERVICES

Our specific services include:

• Structuring franchises, including direct franchising models, master franchises, area development arrangements and joint ventures;
• Advising in relation to disclosure obligations and preparation of national disclosure documents;
• Litigation and dispute resolution, including advising in relation to class actions, terminations, enforcement of non-competition and restrictive covenants, injunctive remedies, mediation and arbitration;
• Advising franchisors on regional and international growth strategies and providing advice to U.S. and international franchisors on expansion into Canada;
• Advising, through our Montreal office, in relation to offering franchises and operating in the Province of Quebec;
• "Canadianizing" foreign franchise documentation;
• Intellectual property protection, including obtaining, protecting and licensing trade-marks and other brand specific intellectual property;
• Advising on compliance with consumer protection legislation;
• Drafting privacy policies, social media policies and advising on privacy issues;
• Advising on regulatory matters affecting franchising;
• Advising in relation to financing and financial services matters; mergers and acquisitions; antitrust/competition law; income tax and commodities taxation matters; labour and employment issues; leasing and land acquisition; and insolvency and restructuring matters affecting franchises.

Structuring a Franchise

Structuring a franchise is a complex process which requires a broader view of a business’ objectives and the depth and breadth of experience and knowledge to help effect that vision. An emerging franchisor may wish to scale out its successful operations into a franchised concept by offering unit franchises, or an existing franchisor might seek to expand into another city, province or country by offering area development rights or a master franchise. In some cases, parties may decide to offer a franchise through the medium of a joint venture. In all cases, issues such as the form of organization employed, tax considerations, regulatory matters and of course of the impact of franchise laws are of primary importance.

Our lawyers have the experience and resources to carry out your plan in a timely and efficient manner.

Franchise Disclosure

Prior to the proclamation into force of the disclosure provisions of the Arthur Wishart Act in 2001, Alberta was the only province requiring full disclosure of all material facts to prospective franchisees prior to the sale of a franchise. Nonetheless, the Canadian Franchise Association recommended that franchisors adopt a practice of voluntary disclosure irrespective of the franchisee’s location. This recommendation became law in Ontario in 2001 and in Prince Edward Island in 2005. The disclosure requirements of the New Brunswick Act will follow upon proclamation of its regulations which is expected imminently. Proper disclosure made in compliance with the Acts of the regulated provinces and prepared in conjunction with experienced franchise counsel is a critical element of every franchisor’s risk mitigation strategy. The recent surfeit of judge made caselaw revolving around the practice of disclosure has largely favoured franchisees. These decisions underline the critical importance of employing counsel who are at the cutting edge of this specialized area of practice.
Ours team of franchise professionals have the knowledge and experience necessary to guide you through the minefield of technical requirements relating to franchise disclosure.

Dispute Resolution

With franchise laws in their relative infancy in Canada, parties have turned to the courts to provide much needed definition to the statutes. Much of the focus of recent disputes has related to the parties’ obligations to act in good faith, to the scope of material disclosures required under the statutes, to the technicalities surrounding what constitutes complete disclosure, to the interpretation of specific statutory rights of franchisees such as the rights of rescission, the rights to associate, and the statutory bars on waivers of rights, and waivers of forum and jurisdiction. Several high profile class actions have also made the headlines as franchisees become more acutely aware of their newfound status under the wave of new laws.
The litigators on our team can provide you with critical advice in advance of the initiation of any proceeding to help you make key decisions prior to engaging. If matters proceed, we can assist in guiding any proceeding and counsel you on alternative dispute resolution options in order to affect a solution in the most timely and cost effective manner.

Franchising in Quebec

The Province of Quebec, known as “La Belle Province”, is Canada’s second most populated province and hence a very important consumer and business market. Its legal system is founded on a civil code based on Napoleonic law. It therefore differs from Canada’s remaining “common law” provinces and contains specific laws, such as the Charter of the French Language, which impose certain linguistic requirements on businesses operating in Quebec. The Civil Code also contains provisions imposing on franchisors obligations of good faith.
Our Group represents several franchisors in the Province of Quebec and is well equipped to assist franchisors with specific requirements under Quebec Law as well as with any expansion of their franchise system into the Province.

Recent examples of our group’s work in this area include:

• drafting a master franchise agreement for the Canadian master licensee of an established U.S. food service franchise
• preparing national disclosure documentation, franchise agreements and providing tax and corporate structuring and compliance advice to a new franchisor offering unregulated health services franchises in Canada
• pursuing an injunction against a franchisee in breach of its non-competition agreement and restrictive covenants
• advising a large Canadian franchisor respecting its good faith obligations and its franchisees’ right to associate under provincial franchise legislation
• assisting a foreign franchisor with deployment of its franchise concept in the province of Quebec
• successfully defend a franchisor facing a rescission claim by a franchisee
• representing an area developer in its expansion within in Canada