Are You A License, Or A Franchise? Tips For Avoiding Being A Franchise

Posted by Taimi Williamson

This article is the fifth in a series prepared for www.franchiselaw.ca by franchise expert Taimi Williamson of Siskinds LLP in London, Ontario. The articles are intended to provide a comprehensive understanding of franchising — in layman’s terms. If you have specific questions or suggestions for future articles, please contact Taimi at taimi.williamson@siskinds.com, or revisit the Siskinds web site at www.franchiselaw.ca.

In my previous articles, I have discussed what it means to be a franchise in Ontario and the disclosure obligations that come with being a franchise.  In this article, I will look at the test for being a franchise and how you can potentially avoid this situation. As covered in an earlier article, a “franchise” is defined as any business relationship where there are three factors present:

1. there is the right to use a trademark;
2. there is the payment of a fee; and
3. there is significant control exercised over the business.

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EXEMPTIONS FROM DISCLOSURE

Posted by Taimi Williamson

This blog post is the fourth in a series prepared for www.franchiselaw.ca by franchise expert Taimi Williamson of Siskinds LLP in London, Ontario. The blogs are intended to provide a comprehensive understanding of franchising — in layman’s terms. If you have specific questions or suggestions for future blogs, please contact Taimi at taimi.williamson@siskinds.com, or revisit the Siskinds web site at www.franchiselaw.ca.

EXEMPTIONS FROM DISCLOSURE

In my previous blog, I discussed the fact that disclosure documents are required by law for all franchisors offering franchises for sale in the provinces of Ontario, Alberta, New Brunswick, P.E.I. and Manitoba.  This blog, while not going into specifics across each of the pieces of provincial legislation, will touch on a few of the content requirements of a disclosure document as well as discuss the delivery and timing of the disclosure process and the consequences for failure to comply with the disclosure requirements.

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OK….So You’re A Franchise….Now What?

Posted by Taimi Williamson

This blog is the third in a series prepared for www.franchiselaw.ca by franchise expert Taimi Williamson of Siskinds LLP in London, Ontario. The blogs are intended to provide a comprehensive understanding of franchising — in layman’s terms. If you have specific questions or suggestions for future blogs, please contact Taimi at taimi.williamson@siskinds.com, or revisit the Siskinds web site at www.franchiselaw.ca.

In the first two blogs of this series, I examined the definition of a “franchise” as contained in the various provincial statutes regulating franchising in Canada (Ontario, Alberta, New Brunswick, P.E.I. and Manitoba all currently have legislation in force that regulates franchising and the sale of franchises in those provinces). This blog will take the next step, and will examine, very generally, the first considerations you need to be mindful of if you are franchising.

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How Can I Verify a Franchisor’s Financial claims?

Posted by Taimi Williamson

I am often asked by people who are beginning to research a franchise to purchase, how can I verify a franchisor’s financial claims? This can be a tricky question to answer as it can have two separate, but equally important meanings. Recently, I was contacted by www.buythatfranchise.ca and asked if I would guest blog on their site about this exact topic. If this is a question that you have been asking yourself lately you can read my response here http://www.buythatfranchise.ca/IndustrialExperts_september_2012/Financial-Claims91.cfm.
If you have specific questions or suggestions for future articles, please contact Taimi at taimi.williamson@siskinds.com, or revisit the Siskinds web site at www.franchiselaw.ca

WHAT IS FRANCHISING? PART II: PRODUCT DISTRIBUTION FORMAT FRANCHISING

Posted by Taimi Williamson

In the first article of this series: “What is Franchising?”, I examined the first portion of the definition of a “franchise” as contained in the various provincial statutes regulating franchising in Canada (Ontario, Alberta, New Brunswick, P.E.I. and Manitoba all currently have legislation in force that regulates franchising and the sale of franchises in those provinces). That format of franchised relationship, known as the “Business Format Franchise”, is deemed to exist where there is: payment of a fee, use of a trademark, and ‘control’ exercised over the franchised business (for the full text of that article, click here). This article will examine the “Product Distribution Format Franchise”; the second component of the definition of a franchise.

The Product Distribution Format component of the definition of a franchise finds a franchise relationship to exist where:

• The franchisee is required by contract to make a payment or ongoing payments in the course of acquiring or operating the franchise;
• There is the grant of representational or distribution rights; and
• The franchisor, its associate, or a third person appointed by the franchisor provides location assistance.

The First Element: Payment

The common element between the Business Format and Product Distribution Formats of franchising is the requirement to make a payment or ongoing payment in the course of acquiring or operating the franchise. The following is reproduced from the first article in our series discussing this payment element:

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WHAT IS FRANCHISING?

Posted by Taimi Williamson

Distribution of Goods and Services

Simply put, franchising is just another way to distribute goods or services. The corner coffee shop owned by an individual is in the business of selling coffee and other food related products to the public. If their product and services are good, there may be an opportunity to increase their sales and revenue by opening multiple locations. They may choose to grow “organically,” which means that they use their own funds to finance future store locations. This is what Starbucks did (with the benefit of money raised through the sale of shares on various stock exchanges). Alternatively, that expansion can occur by way of franchising.

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