Franchise Lawyer for Franchisees and Franchisors
A franchise can be a good way to own a business with a proven system behind it. It can also tie you to a long agreement, a lease you didn't negotiate, and fees that continue whether the location makes money or not. The time to understand all of that is before you sign or pay anything.
Ellahi Law acts for people buying franchises and for business owners who want to franchise. Franchise files are handled by Faizan Ellahi, a lawyer practising in Ontario since 2017 who regularly advises on business purchases, commercial leases and corporate structure.
Buying a franchise
Your rights under Ontario law
Ontario's Arthur Wishart Act (Franchise Disclosure), 2000 applies to franchises operated partly or wholly in Ontario. It gives buyers important protections:
- Disclosure first. The franchisor must give you a disclosure document, and you must receive it at least 14 days before you sign the franchise agreement (or any other agreement about the franchise) or pay any money for it, whichever comes first.
- A right to cancel. If the disclosure document was late or didn't meet the Act's requirements, you may rescind (cancel) the franchise agreement without penalty within 60 days of receiving it. If no disclosure document was ever given, the period is two years after entering into the franchise agreement.
- Fair dealing. Both sides owe each other a duty of fair dealing in performing and enforcing the agreement.
The 14 days matter. Use them for the review, not for waiting.
What our franchise review covers
- The disclosure document: the franchisor's background, litigation history, financial statements, the list of current and former franchisees, and any earnings information
- The franchise agreement: term and renewal, territory, fees and royalties, advertising contributions, supply rules, transfer and exit rights, non-competition clauses and termination
- Related agreements: guarantees, general security agreements, development agreements
- A written summary of the key risks and the points worth negotiating, followed by a call to go through them with you
Fees: every franchise review is quoted in writing before any work begins.
Buying an existing franchise location
Buying a location from a current franchisee is a business purchase and a franchise transfer at the same time. You'll need the franchisor's consent, usually a new or assigned franchise agreement, an assignment of the lease, and a purchase agreement with the selling franchisee covering equipment, inventory, staff and any debts. We review all of it together, so nothing falls between the documents. Resale purchases are quoted the same way, because the scope varies.
Practical advice before you sign
- Call several current and former franchisees from the list in the disclosure document.
- Have an accountant review the financial statements and your own projections.
- Set up a corporation to hold the franchise, if appropriate, and understand what you are guaranteeing personally.
- Don't let a deadline from the franchisor or a sales representative cut the review short.
Franchising your business
If your business works and others want to copy it, franchising may be a way to grow. It also brings legal obligations, starting with a disclosure document that must meet the Act's requirements. We help franchisors with:
- Whether your arrangement is a franchise under the Act, and which exemptions might apply
- Disclosure documents and statements of material change
- Franchise agreements, guarantees and related agreements
- Trademark protection for your brand (with trademark agents where required)
- Corporate structure for the franchisor and any leasing company
Franchisor work varies widely in scope, so we provide a written quote after an initial consultation.
Frequently asked questions
The franchisor says its agreement is "standard" and can't be changed. Is a review still worth it?
Yes. Even where wording can't change, you need to know what you're agreeing to, and franchisors often agree to side letters on points such as territory, opening deadlines or transfer rights.
Do I need a lawyer and an accountant?
Ideally both. We review the legal terms and the disclosure. An accountant reviews the numbers and your business plan.
I already signed. Is it too late?
Not necessarily. If the disclosure was late or deficient, rescission rights may still be open, and the time limits are strict. Contact us right away.
Does the Act apply if the franchisor is outside Ontario?
It applies where the franchised business is to be operated partly or wholly in Ontario. We'll confirm how it applies to your situation.
Next step
Send us the disclosure document and franchise agreement, or call 416-551-1155 to book a consultation by video or at our Scarborough office.