CANADIAN FRANCHISE ASSOCIATION DISCLOSURE DOCUMENT GUIDE

Transcription

1 CANADIAN FRANCHISE ASSOCIATION DISCLOSURE DOCUMENT GUIDE Inaccordancewiththemandatorydisclosurepolicy ofthecanadianfranchiseassociationadopted November4,1996RevisedApril2002. (Tobeupdatedwhenthereisanymaterialchange affectingthefranchisesystem,butatleastannually andtobegiventopotentialfranchiseesand existingfranchiseesonrenewal.) 1. CORPORATE NAME OF FRANCHISOR: (StatethenameoftheFranchisor). 2. BUSINESS EXPERIENCE OF THE FRANCHISOR: (Provideabriefhistoryoftheexperienceof thefranchisorinthebusinessbeingfranchised, includingthenumberofyearsinthatbusiness.) 3. DIRECTORS, GENERAL PARTNERS AND OFFICERS: (Thenamesofthedirectors,generalpartners officersofthefranchisorwhowillhavedayto daymanagementresponsibilitiesrelatingtothe franchiseshouldbelisted.abriefhistoryofthe experienceofsuchdirectors,generalpartners, officersshouldalsobesetout.further,include astatementthatnoconvictionforanindictable offenseunderthecriminalcodeofcanada involvingfranchisesorotherbusinessesor involvingfraudorunfairordeceptivebusiness practices,arisingwithinthelastten(10)years, remainsoutstandingagainstanyofsuch directors,generalpartnersorofficers, franchisor,ordetailsofanysuchconviction). 1

2 4. FRANCHISE EXPERIENCE OF THE FRANCHISOR: (Inthissection,thefranchisorshouldsetout howlongithasbeenawardingthefranchises. Thefranchisorshouldalsodescribeany previousfranchisesystemsoperatedbyitor anyotherfranchisesystemsitcurrently operatingunderdifferenttrade-marksand tradenames.) 5. NATURE OF BUSINESS: (Thenatureofthefranchisor'sbusinessandof thefranchisesbeingoffered,shouldbe described.) 6. EXISTING FRANCHISEES: (Afranchisorwillnormallyincludethefollowing informationintheformofalistwithrespectto itsexistingfranchises: (a)namesofexistingfranchisees; (b)theaddressandtelephonenumberatwhich thefranchiseecanbecontacted,andthe nameofthepersontocontact,where applicable;and (c)theaddressesofthefranchiselocationsof thefranchisee.) (Franchisorsarestronglyencouragedtoinclude suchinformation.ifthefranchisordoesnot includetheaboveinformation,thenthe franchisorshouldincludeastatement describingtheopportunitywhichwillbegiven totheprospectivefranchiseetohavesuch informationdisclosed,ormadeavailablefor reviewbeforemakingadecisiontoinvestin thefranchise.) (Thefranchisorshoulddisclose,provideor makeavailablereviewtheaboveinformationa reasonabletime(atleastfourteen(14)days) priortotheexecutionofanybinding unconditionaldocumentpursuanttowhich 2

3 financialconsiderationispayablebutnot refundable.) 7. CORPORATE OUTLETS: (Alistofexistingfranchisor-ownedandaffiliateownedoutletsshouldsetoutwiththeir addresses.) 8. REQUIRED INVESTMENT BY THE FRANCHISEE: (Totheextentpossible,thefranchisorshould setouttheinvestmentrequiredofthe franchiseebrokendownintothevarious categoriesfront-endfranchisefee,initialcapital package,initialinventoryandleasehold improvements.thefranchisorshouldoutline thetermsofanyavailablefinancinggivenor arrangedbyfranchisorandthetimingofall paymentstothefranchisor.thefranchisor shouldstatewhetherornotanydepositis requiredtowardstheawardofthefranchise, andifso,thetermsofthedepositincluding amountspayableandrefundabilityshouldbe described.) 9. THE FRANCHISE DOCUMENTS: (Thesalientprovisionsofthefranchiseshould besummarizedbriefly,i.e.thelengthofthe termandanyrenewals,amountoftheinitial feeandwhenpayable,theamountofthe royaltyandwhenpayable,theamountofthe advertisingcontributionsandwhenpayable, anyrestrictionsorinvestinginongoing inventory,suppliesandequipment,restrictions onthetermsandconditionsforrenewal, assignment,whetherandtowhatextentthe franchiseereceivesanexclusiveterritory,etc.) (Thefranchisor'scurrentpolicy,ifany,astohow closetoanexistingfranchiseeoutletthe franchisormayestablishanotherfranchiseor franchisor-ownedoutlet,othermethodsof distributionusingthesametrade-mark,and otherfranchisesorfranchisor-ownedoutlets thatdistributesimilarproductsorservices 3

4 underadifferenttrade-mark,shouldbe described.) (Thefranchisor'scurrentpolicy,ifany,asto whetherthecontinuationofthefranchisee's territorydependsontheachievementofa certainsalesvolume,marketpenetrationor othercontingencyandunderwhat circumstancesthefranchisee'sterritorymaybe altered,shouldbedescribed.) 10. REBATES: (Inthissection,thefranchisorshouldprovidea generalstatementwhetherornotthe franchisororitsaffiliatereceivesrebatesor otherbenefitsresultingfromtheinvestingof goodsorservicesbyfranchiseesandifany suchrebatesorbenefitsaresharedwith franchiseesdirectlyorindirectly.) 11. EARNINGS CLAIMS: (Inthissection,thefranchisorshouldstate whetherornotitgivesclaiminformationto prospectivefranchisees.anearningsclaimis oralorwritteninformationgivenbyafranchisor oritsagentfromwhichaspecificlevelorrange ofactualorpotentialsales,costs,incomefrom franchisesorfranchisor-ownedoraffiliateownedoutletsmaybereadilyascertained.if thefranchisormakesanearningsclaim,itmust haveareasonablebasisinfactatthetimeitis made,includingadescriptionofthefactsand assumptionsusedinitspreparation. 12. OPPORTUNITY TO REVIEW DOCUMENTS AND INVESTIGATE THE FRANCHISE: (Astatementshouldbemadetotheeffectthat thefranchiseewillbegivennotlessthan fourteen(14)daystoinvestigatethefranchise.) 13. BANKRUPTCY AND INSOLVENCY: (Astatementshouldbemadetotheeffectthat duringthesix(6)yearperiodimmediately precedingthedateofthisdisclosuredocument neitherthefranchisor,noranydirector,officer 4

5 or general partner of the franchisor having day to day management responsibilities relating to the franchise has been adjudged or voluntarily became bankrupt or was reorganized due to insolvency or has taken the bene t of any statute for the relief of bankrupt or insolvent debtors or is subject to any pending bankruptcy, insolvency or reorganization proceeding, or the particulars of such bankruptcy, insolvency or reorganization should be summarized.) 14. EXISTING LITIGATION: (The franchisor should describe, in reasonable detail, the existence ongoing material litigation with present or former franchisees involving misrepresentation or unfair or deceptive business practices or violating a law that regulates franchises or businesses.) 15. OUTLET CLOSURES: (In this section, the franchisor should provide information about the total number of franchisor-owned, af liate-owned and franchisee outlets have been closed in the two (2) year period prior to the date of the Disclosure Document, and information about the total number of which have been terminated or cancelled by the franchisor, not renewed by the franchisor, reacquired by the franchisor, or which have otherwise left the system during that time.) 16. OTHER MATERIAL INFORMATION: (The franchisor should describe, in reasonable detail, any other information material to the franchise, the franchise relationship or about the franchisor.) 17. CERTIFICATE OF DISCLOSURE: (The franchisor should include the following two paragraphs in this section.) (The foregoing information is provided in accordance with the disclosure policy of the 5

6 CanadianFranchiseAssociationandiscurrent todate.thecanadianfranchiseassociation hasnotcheckedtheinformationanddoesnot knowifitiscorrect.thefranchisorisamember ingoodstandingofthecanadianfranchise AssociationandabidesbyitsCodeofEthics,a copyofwhichisattached.thefranchisee shouldexaminethefranchiseinvestment carefullyandindependentlegal,financialand businessadvicebeforemakingadecisionto investinthefranchise.) (Theinformationprovidedinthisdisclosure document,orinanychangesmadeinrespect ofthisdisclosuredocument,isfullandaccurate informationconsideredbythefranchisortobe materialtothemattersdisclosed.) DATEDthisdayof,20. EXECUTION: (NAMEOFFRANCHISOR) BY: SIGNATURE NAME TITLE 6