Franchise law is a statutorily-modified, and relatively small aspect of contract law.
You don't have to go any further than reviewing the title of the Arthur Wishart Act (Franchise Disclosure), 2000 (AWAFD), to note it's similarity to 'consumer law'. Ontario consumer law (which in Ontario is embodied in the Consumer Protection Act, 2002 (CPA) - soon to be replaced by the already-passed Consumer Protection Act, 2023) is largely all about mandatory disclosure of contractual terms (ie. the 'small print').
The purposes behind these mandatory disclosure rules (in both the consumer and the franchise contexts) are obvious. They are:
the tendency of the 'buyer' to be vulnerable to the self-serving advertisements of suppliers (else why would they advertise?), and
the imbalance in negotiating skill and experience between the supplier and the buyer (ie. while most buyers have engaged in contracts before, never one of this specific nature - but that's what the supplier does all the time).
In a very real sense, the AWAFD is consumer-protection for potential franchisees - attempting to ensure that the enticement of 'being your own boss' doesn't lead them into making bad decisions.
SUBJECTS
APPLICATION
The legal use of the term 'application' can have several aspects, but they all share the common element of being 'governed by a particular body of law'. For example, a statute (a particular body of law) can apply to (ie. govern) variably: certain parties (defendants), categories of people (eg. children, married people), types of contracts (franchise contracts), particular forums (ie. the LTB or the court) - and more. I find it useful when using the term to break down the various aspects and meanings of it, as below.
ASSOCIATION (Right of Franchisees to Mutual Association)
A chronic problem with situations of unequal contractual bargaining power is that the stronger party attempts to require clauses that are unnecessary for the purposes of the contract, but provide them with gratuitous collateral advantages. Examples are 'company towns' where the company restricts employees to only buy food from a company-controlled store, or mobile-home parks where the park owner attempts to contractually appoint themselves as sales agent when the home owner wants to sell but retain the land tenancy.
These 'mutual association' sections (below) are an example of provisions designed to combat this imbalance by voiding provisions that prevent franchisees from associating with each other, a practice which weakens their knowledge and bargaining power.
As noted in the above initial 'Comment', the central AWAFD legal tactic that is used to redress the negotiating inbalance between franchisees and franchisors is 'mandatory disclosure'. Akin to those pages of small-print that you see (and overwhelmingly disregard) in consumer contracts like credit card agreements or when buying a car, 'mandatory disclosure' requires important aspects (here: material facts, financial statements and more) of the franchisor-drafted contract to be included expressly in the contract. These disclosure requirements, along with other franchisee-protective provisions, are intended to counter-balance 'slick' negotiation and drafting techniques that experienced franchisors have honed over years of selling their single product: franchises.
A potential franchisor technique to reduce the effect of mandatory disclosure is to physically minimize the written font of the disclosure - thus the term 'small print'. A straight-forward regulatory technique to address this [here from the Consumer Protection Act, 2002 (CPA), General Reg., s.35(1)11 'Requirements for direct agreements'] is to simply legislate font size (eg. "which shall be in at least 10 point type, except for the heading which shall be in at least 12 point bold type").
Another common technique that can be used against consumers (or in this context, 'franchisees') is to phrase disclosure duties in ambiguities or to otherwise minimize their buyer-protections. The law, as it does in CPA General Reg 35(2), can require that a verbatim ('word-for-word') statement be included in a document.
However, the AWAFD has only rudimentary such protections, requiring only that "(a)ll information in a disclosure document and a statement of a material change shall be accurately, clearly and concisely set out." [AWAFD s.5(6)].
Like most legal topics, 'franchises' has an 'interpretation' aspect. 'Interpretation' essentially means preliminary legal presumptions that apply when reading and applying the law of a legal topic, which here is 'franchises'. For example, in Salah v. Timothy’s Coffees of the World Inc. [Ont CA, 2010, para 26] the court states: "The Wishart Act ... deserves a broad and generous interpretation." This means that the AWAFD will not be interpretated 'narrowly' or 'strictly', but rather 'liberally' or purposely-oriented.
'Venue' is a term I use to mean foreign legal 'forums' - typically foreign courts, tribunals or arbitration (which are 'forums'). Also, in this context, 'foreign' can mean outside Ontario - and thus include forums in other provinces.
For website planning purposes, all proclaimed statutes (both Ontario and Federal) are 'home-located' with a single topic, the below statutes are the 'home statutes' for the Franchise topic.
