Franchise Disclosure Documents

Franchise Disclosure Documents

Franchise Disclosure Documents- also known as FDDs are documents that disclose material information about a franchise from the franchisor to the franchisee.

Six provinces in Canada require FDDs. These provinces are Alberta, British Columbia, Manitoba, Ontario, New Brunswick, and Prince Edward Island. While other provinces have franchise disclosure requirements, these six provinces have requirements that must be provisioned in a formal document. Each province has its requisite disclosure requirement and it is imperative to review each piece of legislation provincially, depending on where the franchise will be located.

FDDs allow franchisees to make informed decisions about a franchise prior to purchasing the franchise. Initial fees and royalties are often discussed during negotiations, and training schedules are reviewed. When taking on a franchise, it is important to understand that there are certain ways a franchise must be operated, according to the franchisor. There are branding, employment, and operational considerations to make. In many cases, a franchisee must spend a certain amount on marketing. It is always important to seek the requisite financial and legal assistance prior to contracting with a franchisor.

Franchise Document Contents

At a bare minimum, FDDs must contain financial information about the franchise, criminal history and deceptive record history of the franchise, material information about the franchise, and any other information the franchisee should know, prior to signing the franchise agreement.

If you have received a FDD and you still have lingering questions about the franchise, you are always able to ask the franchisor specific questions about the franchise..

You may want to inquire about current franchisees and you may want to review its marketing techniques.

Other Franchise Considerations

Among other considerations, you will also want to consider whether the franchisor will request ongoing fees. Most franchise documents will outline initial fees, training fees, and royalties, but ongoing fees might not be as clear. It is important to ensure that these details are explicitly expressed in a FDD and franchise document

For more information on franchises, get in touch with one of our franchise lawyers at 604-930-9578 or email us at info@saidilawcorp.com

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