Much has been written in this space about franchisors being
required to provide prospective franchisees with a disclosure
document. For the uninitiated, a disclosure document is
essentially a prospectus for the franchise system which must be
provided by a franchisor so that people can make informed
investment decisions about whether or not to become
So it would make sense, then, that a disclosure document be
prepared to be site-specific to the particular business opportunity
being purchased by the franchisee. Unfortunately, that's
not always what happens in practice. It is no small expense
for a franchisor to have a disclosure document drafted for them, so
some franchisors make the mistake of not getting continuous legal
assistance in properly disclosing franchisees once that template
document is complete. But in order for a disclosure document
to be legally compliant, and fulfil its intended objective of fully
informing franchisees of what they are about to get into, it needs
to include certain elements of the deal that are specific to that
For many disclosure documents, that may mean including a copy of
a lease. For others, that may mean disclosing the full terms
of any initial fee or royalty terms that differ from the standard
offering. And for others yet, that may mean including
specific estimates about particular construction costs. And,
of course, a disclosure document for a new franchise will look
different in a few key ways from a disclosure document provided to
a franchisee buying an existing location from another franchisee,
or for a franchisee who is renewing its franchise agreement.
As a result, when reviewing a disclosure document on behalf of a
franchisee, franchise lawyers will know exactly what details to
look for to ensure that it was prepared to be site-specific, and
can advise franchisees when they may have a right to rescind the
franchise agreement in the future.
A site-specific disclosure document is a win-win proposition,
then, since the franchisor will be complying with its legal
obligations, and a franchisee will have a clearer picture of the
actual investment they are about to make.
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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