Consumer Tipsheet - Franchises in Alberta

• What is a franchise?
  
  
• What is the law in Alberta?
  
  
• Before You Buy a Franchise
  
  
• Franchise Fraud
  
  
• For More Information
  
  
• Franchises in Alberta (pdf)

A franchise is a type of business arrangement. A franchisee (franchise buyer) buys the right to market particular products and services from a franchisor (franchise sellor). The franchisee buys those rights for a specific period of time in a particular location.

The Franchises Act and Franchises Regulation outline the franchisor's responsiblity to disclose information.  They also provide legal options when the rules in the Act or regulation are not followed.

Franchisors must provide every potential franchisee with a copy of the franchisor’s disclosure document at least 14 days before any agreement relating to the franchise is signed, or the payment of monies relating to the franchise, whichever is earlier.  If this does not happen, the franchisee may cancel all the franchise agreements. Cancellation must occur within 60 days after receiving the disclosure document or within two years after the franchise has been granted, whichever occurs first.

The disclosure document must contain copies of all franchise agreements and financial statement. It must also include information about the franchisor, including, but not limited to: 

• The name, address, and the name under which the franchisor does or intends to do business
  
  
• The principle business address of the franchisor and, if the franchisor has an attorney for service in Alberta, the name and address of that person
  
  
• The business form of the franchisor
  
  
• The length of time the franchisor has conducted a business of the type to be operated by the franchisee
  
  
• The names of the persons with day-to-day franchise management responsibilities.
  

Before You Buy a Franchise

Check each franchise opportunity and ask questions about every part of the business.

Many organizations offer information to help you make an informed decision (refer to contact information at the end of this tipsheet).

The Product or Service

Some questions to consider before making a decision include:

• What is the product or service?
  
  
• Will anyone buy this product?
  
  
• Is it priced competitively with others in its class?
  
  
• Are you guaranteed that the suppliers will continue to provide the product?
  
  
• Are there rules about using trademarks?
  
  
• Are there any government standards for the product or service?  Does the product or service meet those standards?
  
  
• Are there any limits on the product or service's use or licensing?
  

The Company (Franchisor)

Before making a decision you should know:

• Who the directors and managers in the franchisor’s company are, their experience in this type of business, and their length of time with the company
  
  
• The current number of franchises and whether any have closed or changed hands; as well as when it happened and why
  
  
• Any restrictions that will be imposed on your business operation, including what and where you must buy and sell
  
  
• If the company has done a feasibility study for  you and what the results suggest
  
  
• Who decides the franchise’s location within your area and whether the location offered suits your needs
  
  
• What type of start-up and on-going training and support the franchisor offers
  
  
• About their advertising and promotional funds and how they work
  
  
• Training