Franchise Agreement Review: A Buyer's Checklist
Before you sign, have it read for you. Our franchise lawyers review the disclosure document and every agreement in the package and flag the clauses that carry real risk. Francis Mehr LLP acts for franchisees and franchisors in Ottawa and across Ontario. For other franchise services, see our Ottawa franchise lawyers page. Book a consultation with the lawyers at Francis Mehr LLP: (613) 226-1011.
This checklist tracks what Ontario's Arthur Wishart Act (Franchise Disclosure), 2000 and O. Reg. 581/00 require the franchisor to disclose, and the clauses that decide fees, territory, exit and post-term limits.
Three Things to Confirm Before You Read a Single Clause
You received the disclosure document in time. The franchisor must provide it, and you must receive it, not less than 14 days before the earlier of signing the franchise agreement or any other agreement relating to the franchise, and paying any consideration relating to the franchise, other than a qualifying deposit (Arthur Wishart Act, s. 5(1)). Confidentiality, non-use or site-designation agreements are carved out, within limits (s. 5(1.1)–(1.2)).
Every agreement you will be asked to sign is attached. The disclosure document must include copies of all proposed franchise agreements and other agreements relating to the franchise to be signed by you (s. 5(4)(c)), and must be delivered as one document at one time (s. 5(3)).
Any deposit is refundable and within the limit. A payment is excluded from the 14-day trigger only if it does not exceed 20 per cent of the franchise fee, to a maximum of $100,000, is refundable without deductions, and is given under an agreement that in no way binds you to enter into a franchise agreement (s. 5(1)(b); O. Reg. 581/00, s. 7.1(1)).
The Clause-by-Clause Review Table
Clause | What we check | Why it matters |
|---|---|---|
Initial fee, royalties and other costs | Establishment costs, deposits and fees, and whether they are refundable (O. Reg. 581/00, s. 6 para. 1). See how franchise fees work. | Full costs, not just the headline fee. |
Advertising fund | If you must contribute, prior two years' spending and franchisor retention, plus current-year projections (s. 6 para. 6). | You may fund unseen campaigns. |
Territory and proximity | Exclusive territory and conditions (s. 6 paras. 12–13) and the proximity policy (para. 14). | A nearby unit can undercut your territory. |
Supply obligations and rebates | Purchase or lease restrictions (s. 6 para. 7) and whether volume rebates or other benefits are shared with franchisees (para. 8). | Restricted supply and unshared rebates change margins. |
Training and support | Whether training is mandatory and who pays (s. 6 para. 5). | Mandatory training can be a cost. |
Term and renewal | Termination and renewal conditions (s. 6 para. 18). | A tight renewal can leave you with nothing to sell. |
Transfer and resale | Transfer conditions (s. 6 para. 18). | A hard transfer clause can trap you. |
Default and termination | Default and cure terms, plus disclosed termination conditions (s. 6 para. 18). | These clauses decide how fast it ends. |
Post-term non-compete and non-solicit | Activity, time and geography. Restrictive covenants are presumed unenforceable as restraints of trade unless they are reasonable (F45 Training Canada Limited v. 2685802 Ontario Limited, 2026 ONCA 775, paras. 11, 21). | An overbroad restriction may not hold. |
Personal guarantee | Who must give a personal guarantee, for how long, and for what amounts. See personal guarantees on commercial leases. | Check when the guarantee ends and whether it survives termination or transfer. |
Lease or sublease | How the location is held and what happens if the franchise ends. See commercial lease review. | Losing the premises can end the business. |
Dispute resolution, governing law and forum | Mediation or other process described in the disclosure (O. Reg. 581/00, s. 5). The Act applies to a business operated partly or wholly in Ontario (s. 2(1)). A restriction on Ontario law or an out-of-province forum is void for a claim otherwise enforceable under the Act in Ontario (s. 10). | A foreign forum clause does not oust the Act. |
If a projection of earnings is given, its reasonable basis, assumptions, and where supporting information can be inspected must be disclosed (O. Reg. 581/00, s. 6 para. 3), as must any franchisor financing terms (para. 4) and rights in the marks (para. 9). Every franchise agreement imposes a duty of fair dealing, including good faith and reasonable commercial standards (Arthur Wishart Act, s. 3(1), (3)). If you are incorporating to hold the franchise, see setting up your company.
Questions to Put to the Franchisor and Current Franchisees
Every disclosure document must say, at the beginning, that independent legal and financial advice should be sought before you enter into the franchise agreement, and that you are strongly encouraged to contact current or previous franchisees (O. Reg. 581/00, s. 4, paras. 2–3). Use the lists the regulation requires:
Ontario franchisees who left the system in the last fiscal year, with last known address and telephone number (s. 6 para. 15)
Reasons for each closure of a franchise of that type in the previous three fiscal years (para. 16)
Locations, addresses, telephone numbers and names of current Ontario franchisees of the type being offered (para. 17)
What You Get From Our Review
A written issues list ranked by risk, a plain-language explanation of key clauses, points to raise before you sign, and a walk-through call. This reviews the documents you provide, not a promise about what the franchisor will change.
Related Franchise Help
Late, incomplete or missing disclosure is a rescission issue under the Arthur Wishart Act. For an existing dispute, see franchise litigation.
Franchise Agreement Review FAQs
When should a lawyer look at my franchise agreement?
Before you sign anything, or pay anything beyond a qualifying deposit. Ontario's franchise law requires the franchisor to deliver its disclosure document not less than 14 days before either step, and every disclosure document must state that independent legal and financial advice should be sought before entering into the franchise agreement.
What documents should I gather for a franchise agreement review?
The complete disclosure document with its financial statements, every agreement you are being asked to sign (such as the franchise agreement, lease or sublease, personal guarantees and supply agreements), any statement of material change, and your own budget and financing terms.
What must the disclosure document tell me about advertising funds and supplier rebates?
If you must contribute to an advertising fund, the disclosure document must describe how the fund has been spent and how much the franchisor kept in the previous two fiscal years, and project the same for the current year. It must also describe the franchisor's volume-rebate policy and whether the franchisor receives rebates or other benefits from your purchases, and if so whether they are shared with franchisees.
Are post-term non-competes in franchise agreements always enforceable?
No. Restrictive covenants are presumed to be unenforceable restraints of trade, but a court can uphold one that is reasonable. In 2026 the Court of Appeal for Ontario held a franchise non-compete unenforceable because it restricted more activities than needed to protect the franchisor's interests, while upholding a narrower non-solicitation clause (F45 Training Canada Limited v. 2685802 Ontario Limited, 2026 ONCA 775, paras. 11, 21, 52–57).
Does Ontario franchise law still apply if the agreement picks another province's law?
For a business operated partly or wholly in Ontario, the Arthur Wishart Act applies, and a clause that restricts the application of Ontario law, or moves the case to a forum outside Ontario, is void for a claim otherwise enforceable under the Act in Ontario.
Which franchise agreement terms are worth pushing back on before I sign?
It depends on the franchisor, the system and the deal. A focused review tells you which terms carry the most risk for you, so you can raise them before you sign rather than after.
Book a Consultation Before You Sign
See our Ottawa franchise lawyers page. Book a consultation with the lawyers at Francis Mehr LLP: (613) 226-1011, or contact us.
Written by the lawyers of Francis Mehr LLP. Updated November 13, 2026. General information, not legal advice. Every franchise and every agreement turns on its own facts; get advice on your situation before you sign or pay.