“franchise”: the right to carry out a business in which the franchisee is required, by contract or other means, to make a payment or ongoing payments to the franchisor or partner of the franchisor, during commercial activity or as a condition of acquisition of the franchise or hospitality activity, and in which: once a franchise agreement is executed, the CCQ may also impose “implicit” obligations on , beyond the written terms of the contract. Quebec courts have applied the CCQ to recognize broad tacit obligations and read them into franchise agreements, including the disclosure requirement; The obligation to cooperate and co-operation; The duty of loyalty The duty to respect the reasonable expectations of the other party; and the obligation to treat the parties equally in similar situations and, among other things, to properly exercise their rights. Quebec courts have applied these implicit obligations to punish the inappropriate behaviour of franchisors, even though the franchise agreement does not explicitly prohibit specific behaviour. If the franchise agreement does not include a contractual right to renew or renew the franchisee, the franchisee is not entitled to damages if the franchise agreement is not renewed or extended by the franchisor at the end of its term. Franchise legislation in each province requires the delivery of a disclosure document to a potential franchisee at least 14 days prior to the execution of a franchise agreement or payment of money to the franchisor`s or franchisor partner. A distinguishing feature of Canadian franchise legislation is that in addition to the considerable number of listed items that must be disclosed in a disclosure document, each disclosure document must disclose all “essential facts.” Any information relating to the transaction, operation, capital or control of the franchisor, franchisor or franchisor or franchised system, which would reasonably be expected to have a significant influence on the potential franchisee`s decision to acquire the franchise or on the value or price of the franchise. The case law has decided that the disclosure document should be individualized to the franchise concerned. Yes, for example. B, a lease agreement is linked to a particular franchise site, it must be included in the disclosure document.
In the event that a “substantial change” occurs in the period following the issuance of the publication document and the execution of the franchise agreement or the payment of money by the potential franchisee, the franchisor must submit a substantial change declaration. A significant change is (a) any change in the activity, activity, capital or control of the franchisor or franchisor or (b) a modification (or mandatory change) to the franchise system that would reasonably be expected to have a significant negative impact on the value or price of the franchise to be granted or on a franchisee`s decision to acquire the franchise.