Class Notes (811,485)
Canada (494,756)
LAW 525 (109)
Gil Lan (12)
Lecture 8

Law 525 Lecture 8.docx

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Law and Business
LAW 525
Gil Lan

Lecture 8 Franchise and the law • Most common way to interact with consumer • It is predetermined • Great way to have a business without starting out on own • Very attractive to most • Non-technical definition: a marketing technique whereby franchisor supplies product or service to franchisee who in turn makes it available to the public • Benefits and risks Ontario Arthur Wishart Act (Franchise Disclosure), 2000 • A disclosure registration law regulatory approach (minimalisitic) • Requires party to disclose to each other certain information, contract has to have certain terms within a certain of time • Basically a disclosure law • Act designed to provide protection to the public by requiring full, plain and true disclosure of all material facts re: the franchise being offered • Act prohibits anyone, unless exempt, from engaging in franchise business until an application of registration of a franchise and ancillary documents have been filed • Does not have any offences (VERY IMPORTANT) • Material fact – any information about the business……that would reasonably be expected to have a significant effect on the value or price…or the decision to acquire (ex rat infested neighbourhood) • Material change – a change in business….that would reasonably be expected to have a significant adverse effect on the value…of the franchise or on the decision to acquire the franchise and includes a decision to implement such a change • Misrepresentation – includes an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made • Duty of fair dealing on each party to franchise agreement in its performance and enforcement (s. 3(1)) • Obligation of disclosure (s. 5) • Must be provided to prospective franchisee at least 14 days before signing of agreement and payment of any consideration • Must contain all material facts, financial statements, copies of proposed agreements, statements to assist in making informed decisions • If franchise legislation was not in place anyone could buy a franchise • Regulations • Must include: business background, litigation history, bankruptcy or insolvency information, financial statements • Must include the following info about franchise offer: costs, proposed agreement, description of any exclusive territory, restrictions (e.g., obligations to purchase from certain suppliers), policy on volume rebates, conditions of termination, renewal, transfer, mediation process (if any), training, advertising • Rights to associate – a franchisee may associate with other franchisees and may form or join an organization of franchisees, (franchisor cannot stop franchisee to see other franchisee) • Franchisor can’t interfere with such association of franchisees • Franchisor can’t penalize directly or indirectly such association of franchisees (s. 4) • Upto you to bring action there are no offe
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