Franchisors/Foreign Franchisors

A franchise creates a broad spectrum of assumptions and expectations on the part of the general public. The consumer has come to expect a sophisticated front-of-shop operation providing a consistently high quality of goods or services regardless of the location they choose to patronize. This is, of course, intentional. It is the mechanism through which brand loyalty and goodwill are generated and maintained.

The average patron gives little thought to how the operation is actually conducted. From a consumer perspective the sole interest is to receive the same quality of product, service, presentation and environment regardless of the business realities of any particular location. The interests of both the franchisor and franchisee in meeting the assumptions and expectation of the consumer clearly define and delimit to a large extent, the business side of what is the common cause.

A franchisor’s expectations and interests regarding the franchise system itself revolve around three fundamental principles:

1. That all franchisees are required to follow the system of procedures for the operation of the franchised business
2. That provided a franchisee follows these systems, it should be financially successful
3. That in having each of its franchisees become financially successful, the franchisor will create synergistic effects, resulting in a value increase for the franchisor’s brand and trademarks

Getting franchisees to buy into, and follow a system, is a challenge faced by every franchisor. Franchising is a complicated undertaking involving many significant business and legal considerations. Our team has the knowledge and insight to guide you through the process of transforming your business into a franchise system. We will apply our cumulative experience to your particular business reality to help you make sound decisions throughout that process and to provide you with the tools you will need to meet each challenge along the way.

We offer the following services for Franchisors:

• The structure and preparation of franchise agreements and ancillary documentation (i.e. sublease agreements, general security agreements, trade mark license agreements, software license agreements, etc.)
• The preparation of disclosure documents for new franchisors to comply with the Arthur Wishart Act (Franchise Disclosure) 2000 (Ontario) and other provincial franchise legislation (collectively “Franchise Legislation”)
• Legal aspects of franchising a business
• The preparation of disclosure documents for non-Canadian franchisors to comply with Franchise Legislation
• Advising franchisors with respect to the impact of technology and communication on franchise and distribution relationships, including electronic commerce issues
• Advising franchisors with respect to other areas of law which impact on the operation of franchise systems, including business law, information technology, employment, leasing, taxation

Franchise Relationship Services

• Addressing relationship problems and advising on ways to enhance franchise and distribution relationships
• Defaults, terminations and transfers
• Establishing, structuring, organizing and advising Franchisor Advisory Councils
• Establishing, structuring, organizing and advising Franchisee Associations
• Insolvency issues
• The obligations imposed on the franchise relationship by Franchise Legislation

Franchise Litigation Services

• Legal proceedings to obtain or defend claims for injunctive relief to enforce termination rights, restrictive covenants
• Protection of trade-name, trade-mark, domain name rights and other intellectual property rights
• Representing franchisors, franchisee associations and franchisees with their disputes through negotiation, mediation, arbitration (all forms of alternative dispute resolution mechanisms) or litigation regarding all aspects of the franchise relationship including breaches of the statutory duty of fair dealing pursuant to Franchise Legislation
• Representing franchisors and franchisees in class and representative action

If you have questions regarding the purchase, sale, or ownership of a franchise based business, please contact our office at 855-324-3944 or via email at dkornhauser@msmlaw.ca.

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Articles

Foreign Based Franchisors: Expansion into Canada
Expansion into Canada is attractive to foreign based franchisors for a variety of reasons. Canada has a mature domestic economy and its citizens enjoy a high standard of living. Read More

Foreign Based Franchisors: Expansion into Canada - The Franchise Agreement
A franchise system that has proven to be successful in a franchisor's home country will generally require considerable modification and adjustment in order to succeed in a foreign country. - Read More