Cross-border franchising — Lexpert

Osler partner Jennifer Dolman tells Lexpert that despite the proximity between Canada and the U.S., franchisors moving into Canada should consult Canadian counsel and do their research in order to “eliminate exposure to rescission and other claims.” In her article, author Sandra Rubin discusses the particular issues faced by cross-border franchisors, including language, disclosure and provincial statutes. Jennifer, a partner in Osler’s Litigation Practice Group and a franchise law expert, says franchisors also need to pay particular attention to case law.

“I’ve been closely following Wishart Act cases for the past 17 years,” Jennifer tells Lexpert. “I have over 200 now, many of which have interpreted the Wishart Act in ways that franchise lawyers reading the statute as drafted would never have contemplated.”

The article references a key decision by Ontario Superior Court Justice Matheson, who considered “an alleged failure of disclosure in breach of the Arthur Wishart Act (Franchise Disclosure), 2000, (S.O. 2000, c. 3) and related regulations” in Railbex Canada Ltd. v. ASWR Franchising Corp., 2016 ONSC 5575.

Jennifer tells Lexpert this decision “is a significant game-changer if it means franchisors can’t deliver disclosure documents before leasing arrangements and all other material facts are known. Hopefully we’ll get clarity from the Court of Appeal, but until then, the common practice of selecting a site after the franchise agreement has been signed is not without risk.

“To help reduce or eliminate exposure to rescission and other claims, franchisors should be speaking to experienced Canadian franchise counsel now about available options.”

For more information, read Sandra Rubin’s article “Cross-border franchising” in Lexpert.