Arthur Wishart Act: What an Ontario Food Franchise Buyer Gets in 14 Days, 60 Days and 2 Years

The Arthur Wishart Act (Franchise Disclosure), 2000 is Ontario's franchise law, and its core rule fits in one line: the franchisor must give you a complete disclosure document at least 14 days before you sign any agreement relating to the franchise or pay anything for it, whichever comes first (s. 5(1)). If the document arrives late or misses required content, you may rescind within 60 days of receiving it; if you never received one, within two years of signing (s. 6(1)–(2)). The Act reaches any franchise "to be operated partly or wholly in Ontario" (s. 2(1)), so a catering, bakery or meal franchise in Ottawa that meets the definition is covered. This guide reads the Act and its regulation, O. Reg. 581/00, from the side of a food franchise buyer; it is general information, and a franchise lawyer should read your actual documents.

Section 1(1) defines a franchise by three elements: you make a payment, or commit to one, to the franchisor or its associate; you sell goods or services "substantially associated with a trade-mark, trade name, logo or advertising" of the franchisor; and the franchisor has the right to exercise significant control over, or to give significant assistance in, your method of operation, "including building design and furnishings, locations, business organization, marketing techniques or training". Recipe standards, a fixed menu and mandatory training are the kind of control the definition describes. Section 2(3) lists what falls outside, including a relationship "arising out of an oral agreement where there is no writing which evidences any material term", and under s. 12 the person who claims an exemption has to prove it.

The 14 days run from the day you receive the document to the earlier of two events: your signature on the franchise agreement or on "any other agreement relating to the franchise", and any payment to the franchisor or its associate. Two things may happen inside the 14 days. You may sign a confidentiality agreement, or an agreement that designates a location, site or territory (s. 5(1.1)). You may also pay a deposit, if it is "refundable without any deductions" and given under an agreement that "in no way binds" you to sign (s. 5(1)(b)); O. Reg. 581/00 s. 7.1 caps it at 20 per cent of the franchise fee, to a maximum of $100,000. On a $30,000 franchise fee, that is $6,000 at most.

The document must be "one document, delivered … as one document at one time" (s. 5(3)), personally, by registered mail or by a prescribed method (s. 5(2)). The regulation allows email when the document "contains no links to external documents or content" and you send a "written acknowledgment of receipt" (O. Reg. 581/00 s. 12(1)), and courier when the franchisor pays for it (s. 12(2)). Keep the email and your acknowledgment: the date on them starts the 14-day count and, later, the 60-day rescission window.

Inside, the Act requires "all material facts", financial statements, and "copies of all proposed franchise agreements and other agreements relating to the franchise" (s. 5(4)), all "accurately, clearly and concisely set out" (s. 5(6)). A material fact is any information about the franchisor or the system "that would reasonably be expected to have a significant effect on the value or price of the franchise" or on your decision (s. 1(1)). The financial statements are audited or review-engagement statements for the last fiscal year, and a franchisor in business for less than a year gives an opening balance sheet (O. Reg. 581/00 s. 3). Four statements are printed together at the front, among them that independent legal and financial advice "should be sought", that you are "strongly encouraged to contact any current or previous franchisees", and that the cost of goods bought under the agreement "may not correspond to the lowest cost" available (s. 4). With a franchisor less than a year old, that opening balance sheet may be the only financial picture you get, so ask how the first units are funded.

For a food franchise, section 6 of the regulation holds the paragraphs that decide the economics. Paragraph 1 lists the set-up costs: fees and deposits and whether they are refundable, "an estimate of the costs for inventory, leasehold improvements, equipment, leases, rentals" with its assumptions, and every other payment to the franchisor. Paragraph 7 covers obligations to buy from the franchisor or from suppliers it approves, and paragraph 8 says whether the franchisor earns "a rebate, commission, payment or other benefit" on your purchases. Paragraph 5 covers training and, if it is mandatory, "who bears the costs". Paragraph 6 covers the advertising fund, including the share spent and the share retained over the last two fiscal years. Paragraphs 12 to 14 cover any exclusive territory, what can take it away, and the franchisor's policy on nearby units.

Paragraph 10 matters most to a caterer: the document must describe "every licence, registration, authorization or other permission" you need under federal or provincial law "or municipal by-law". In Ottawa, the City's food premises licence is required for "catering establishments", costs approximately $298 a year, expires every March 31 and needs a certificate for $2 million of commercial general liability insurance. The City's new Licensing By-law takes effect on 1 January 2027, and the City states it makes no changes to the food premises requirements. Separately, Ontario's food premises regulation requires every operator of a food service premise to have at least one person who has completed food handler training on site "during every hour in which the premise is operating" (O. Reg. 493/17 s. 32). Ask the franchisor which of these its existing units hold and who pays for them, and read our guide to catering licences in Ottawa for the local steps.

Ontario allows a franchisor to stay silent on earnings. If it does give an earnings projection, the document must state "the reasonable basis for the projection, the assumptions underlying the projection and a location where information is available for inspection" that backs it up (O. Reg. 581/00 s. 6 para 3), and the same rule covers an estimate of annual operating costs (para 2). A sales or profit figure mentioned in a meeting and missing from the document is worth asking for in writing. If you suffer a loss because of a misrepresentation in the document, or because the franchisor did not comply with section 5, you have a right of action for damages against the franchisor, its agent, its broker, its associate and every person who signed the document (s. 7(1)), and you are "deemed to have relied on the misrepresentation" (s. 7(2)), unless you bought with knowledge of it (s. 7(4)).

Facts can change between delivery and signing. A material change is a change in the franchisor or the system that "would reasonably be expected to have a significant adverse effect" on the franchise's value or on your decision (s. 1(1)), and the franchisor must give you a written statement of it "as soon as practicable" and before you sign or pay (s. 5(5)).

Rescission is the Act's main remedy, and it has two clocks. Late or deficient disclosure: within 60 days after receiving the document (s. 6(1)). No document at all: within two years after entering into the agreement (s. 6(2)). The notice must be in writing and delivered personally, by registered mail, by fax or by a prescribed method (s. 6(3)); by mail it takes effect on the fifth day after mailing (s. 6(4)(b)). Within 60 days of the rescission the franchisor must refund your money other than for inventory, supplies or equipment, buy back that inventory, supplies and equipment at the price you paid, and compensate your other losses in acquiring, setting up and operating the franchise (s. 6(6)).

Four more rules protect you after you sign. Every franchise agreement imposes a duty of fair dealing on each party, which "includes the duty to act in good faith and in accordance with reasonable commercial standards" (s. 3(1), (3)), and a breach gives a right of action for damages (s. 3(2)). You may associate with other franchisees and form or join an organization of franchisees, and a clause that restricts this is void (s. 4(1), (4)). A clause moving a claim under the Act to a forum outside Ontario is void (s. 10). And any waiver or release of your rights under the Act is void (s. 11).

The disclosure duty has exemptions, listed in s. 5(7). The ones a food buyer meets most: a franchisee reselling its own unit for its own account, in a sale the franchisor does not make or arrange (s. 5(7)(a)); a renewal or extension with no material change (s. 5(7)(f)); an additional unit substantially the same as one you already run, with no material change since your agreement (s. 5(7)(c)); a total initial investment of $15,000 or less (s. 5(7)(g)(i), O. Reg. 581/00 s. 9(2)) or more than $3,000,000 (s. 5(7)(h), O. Reg. 581/00 s. 9(3)), counting fees, deposits, inventory, leasehold improvements, equipment, leases and rentals (O. Reg. 581/00 s. 9(1)); an agreement of one year or less with no non-refundable fee (s. 5(7)(g)(ii)); and a fractional franchise, where the new line is expected to be 20 per cent or less of an existing business's sales in its first year (s. 5(7)(e), O. Reg. 581/00 s. 8). Subsection 5(7) switches off section 5 only, so fair dealing (s. 3), the right to associate (s. 4) and the void-waiver rule (s. 11) still apply. For a small food concept at $15,000 or less all in, the franchisor may lawfully give you no disclosure document, so the checking falls to you.

The document reaches you unchecked by any government office. Ontario's own guidance says "The government is not involved in the review or approval of franchisors or their disclosure documents", and that "Disputes about franchise agreements are settled through the courts." The Act on e-Laws shows no amendment since 1 September 2020 and O. Reg. 581/00 none since O. Reg. 418/20, so neither changed in the last 12 months. The same guidance tells buyers to consult "legal and financial professionals who are independent from the franchisor" and to have an accountant review the financial documents. Both are paid services, and both are worth booking before the 14 days run out.

Our guide to franchise disclosure laws by province compares Ontario with the other six provincial statutes, and our guide to catering franchises in Canada covers costs and named brands. OH! Catering, a family business in Ottawa, is preparing a partner programme of its own. No terms are published, and any offer will come with a disclosure document under this Act before anything is signed or paid. Interest can be registered on our catering franchise page.

Arthur Wishart Act and O. Reg. 581/00: the deadlines and numbers, with sections

Reading a food franchise disclosure document: where to look and what to check

Arthur Wishart Act — the short version

• Disclosure document at least 14 days before you sign any franchise-related agreement or pay anything (s. 5(1)).
• A refundable, non-binding deposit is allowed first: up to 20% of the fee, maximum $100,000 (O. Reg. 581/00 s. 7.1).
• Late or deficient document: rescind within 60 days of receipt; no document: within 2 years (s. 6).
• After rescission the franchisor has 60 days to refund, buy back stock and equipment, and cover losses (s. 6(6)).
• Earnings projections are optional; if given, they need a stated basis, assumptions and data you can inspect.
• Exempt from disclosure: resales by a franchisee, total investment of $15,000 or less, over $3,000,000, and more.
• The Ontario government does not review disclosure documents; disputes go to the courts.

Sources: Ontario e-Laws — Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3, ss. 1–7, 10–12; Ontario e-Laws — O. Reg. 581/00, General, ss. 3, 4, 6, 7.1, 8, 9, 12; Government of Ontario — Franchising information for buyers and owners; City of Ottawa — Food premises licence; Ontario e-Laws — O. Reg. 493/17, Food Premises, s. 32.

OH! Catering is preparing a franchise for styled share tables and Ukrainian dishes. Read about The OH! Catering franchise.