Becoming a franchisee is generally viewed as a safe port of
entry into business ownership where entrepreneurs can experience
success by joining an established brand. While the advantages to
entering a franchise system are numerous, prospective franchisees
should also be aware of the many challenges which they might
Franchising provides some form of a safety net to franchisees in
that the time and money to crystallize the brand's goodwill
have largely already been invested by the franchisor. However, the
trade-off is that in order to maintain a consistent chain of
businesses offering consistent products and services, franchisees
lose a substantial amount of control over their business
operations. This surrender of control to a franchisor means that
franchisees should expect to comply with formal standards, purchase
from approved suppliers and receive regular inspections from head
Franchisees do sometimes take issue with the list of approved
suppliers as they may feel that they can locate better prices for
the same inventory elsewhere. Franchisors are entitled to receive
volume rebates and discounts as a result of the group buying power
which it coordinates, so franchisees should be aware of this
product purchase restriction.
Franchise agreements will also maintain a lengthy list of
potential defaults by a franchisee of the franchise agreement which
entitles the franchisor to penalize or terminate the franchisee. It
is rare that the franchisee is granted reciprocal rights to
terminate the agreement based on the actions of the franchisor.
In recognition of this imbalance of power, franchise law exists
in several provinces to protect the franchisees from being abused
by a franchisor. Franchisees should be sure to carefully review the
rights and restrictions contained in the franchise disclosure
document to ensure that they are making informed investment
decisions and can survive within the franchisor's
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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