What Is Franchise Disclosure in Canada?

Franchise disclosure in Canada refers to the legal requirement for franchisors to provide prospective franchisees with detailed information about the franchise system before any agreement is signed or money is paid.

This information is typically delivered in a franchise disclosure document, often called an FDD. While people commonly use the term FDD, the Canadian disclosure document is not the same as the U.S. version.

In provinces with franchise legislation, disclosure exists to help buyers understand what they are getting into before making a major financial and personal commitment.

How Franchise Disclosure Works Under Canadian Law

Franchise disclosure laws are governed at the provincial level. Ontario’s legislation is known as the Arthur Wishart Act, and similar laws exist in several other provinces.

Under these laws:

• Buyers must receive disclosure before signing a franchise agreement

• Buyers must be given time to review the information

• Franchisors must disclose key facts about the business, costs, and risks

A mandatory cooling-off period applies once proper disclosure is delivered, giving buyers time to review documents, ask questions, and seek professional advice if needed.

Why Franchise Disclosure Feels Overwhelming for Buyers

Many buyers panic when they receive a disclosure package because it is long, detailed, and unfamiliar. Documents can be hundreds of pages, and the legal language alone can feel intimidating.

A common misconception is that signing a disclosure receipt means committing to the franchise. In reality, the receipt simply confirms that the documents were received. It does not force a buyer to move forward.

Understanding this alone often removes much of the anxiety buyers feel during the disclosure stage.

What Buyers Should Focus on First

When reviewing franchise disclosure in Canada, buyers don’t need to read every page in one sitting. A practical approach is to focus on key areas first, including:

• Estimated startup and ongoing costs

• Obligations under the franchise agreement

• Renewal, transfer, and exit options

• Territory rights and limitations

• Support and training provided by the franchisor

These sections provide a clearer picture of what day-to-day ownership may look like and what long-term commitments are involved.

Why Earnings Claims Work Differently in Canada

One of the biggest frustrations for buyers is the lack of earnings information. Unlike in the United States, Canadian franchisors are generally restricted from providing financial projections or profit guarantees.

This isn’t about hiding information. It’s about regulation and risk. Providing earnings claims can expose franchisors to legal issues if expectations are not met.

Instead, buyers are encouraged to evaluate financial potential by:

• Speaking with current and former franchisees

• Reviewing the franchisor’s financial statements

• Observing existing franchise locations

• Comparing similar markets and territories

What Franchisors Need to Get Right

For franchisors, disclosure is more than a legal requirement it’s part of the sales process. Clear, timely, and compliant disclosure builds trust and helps deals move forward smoothly.

Common issues arise when disclosure is delayed, incomplete, or inconsistent. These mistakes can slow down the process, confuse buyers, and create unnecessary risk.

A well-prepared disclosure process reflects professionalism and sets the tone for a strong franchise relationship.

Final Thoughts

Franchise disclosure in Canada doesn’t need to be intimidating. With the right understanding, buyers can approach the process confidently, and franchisors can guide prospects more effectively.

Clear information leads to better decisions and better long-term franchise relationships.