The National Law Review reports that long-awaited changes are
coming to the ways franchisors are allowed to deliver
their disclosure to franchisees in Ontario.
Previously, Ontario's laws required franchisors to deliver the
disclosure to franchisees personally or by registered mail. The
recent changes to the Arthur Wishart Act, which governs the legal
aspects of franchise disclosure in Ontario, will made it possible
for franchisers to send disclosures electronically or by prepaid
courier legally. This move brings Ontario more in line with the
rest of the country and reflects the increasing use of technology
across multiple industries throughout Canada. It officially went
into effect on July 1, 2016.
The new electronic disclosure requirements
Ontario franchisors will have to follow certain rules for electronic disclosure as set by the amendments and covered below.
Disclosure documents must be delivered in a format that allows the
person receiving them to store,
view, retire and print the documents.
• The disclosure can’t have any links to external content or documents.
The disclosure must have an index for each file making up the
entire document. Indexes have to state
the file name, and if the name is not descriptive enough, the franchiser must include a statement
describing the document’s subject matter.
• The franchisor must get a written acknowledgement of receipt from the potential franchisee.
The new rules also allow a franchise to send a notice of rescission, which is used when a franchisee is ending the agreement because he or she never received a proper disclosure, by prepaid courier. Before the changes, a franchisee could only send the notice by registered mail, fax or personal delivery.
While the acceptable methods of delivery have increased, all the general requirements for disclosures are still the same and apply to the new disclosure forms. Franchisors must follow all the disclosure rules to avoid any potential problems in the future, and franchisees still must review the disclosure carefully before investing in a specific franchise.
Before these amendments were passed, Ontario was the only province in Canada that had specific, mandatory franchise disclosure delivery methods and the only one that did not expressly allow delivery by courier or electronically. These disclosure delivery changes will help streamline the process, bring Ontario into the flow with the move toward electronic documentation, and allow for greater consistency when it comes to franchise disclosure delivery across the country.