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Canadians Tackle Disclosure Documents and Other Franchise Mysteries

By Paul Jones
September 26, 2008

In Canada, franchise disclosure documents (“FDDs”) are not reviewed by any government agency. It is up to the franchisor to prepare and deliver the document correctly, failing which the franchisee can, for a limited period of time, send in a rescission notice.

The limitation period for a complete failure to deliver a disclosure document is two years. But the limitation period for the delivery of an incomplete disclosure document is only 60 days. Most franchisees do not sour on the deal in the first 60 days. But most franchisors deliver some form of disclosure document, making the two-year rescission period unavailable. That is unless the disclosure document delivered is not a disclosure document. Two recent cases in Alberta and Ontario have considered the issue of whether a failure to sign the certificate required in Canada is fatal to the disclosure document. They came to opposite conclusions.

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