Читать книгу Buying a Franchise in Canada - Tony Wilson - Страница 17

Deposit agreements containing confidentiality covenants are, on the whole, an encouraging sign within the franchise relationship. Franchisors have legitimate interests to protect. The franchisor wishes to separate the serious contenders from the “tire kickers,” and the litmus test for that purpose is the execution of a deposit agreement and the placing of a deposit. The tire kickers will move on to other franchises; the serious contenders will take the process further.

From the perspective of the franchisor, it not only wishes to separate the genuinely interested from the marginally interested, it also wishes to protect its system, concept, and intellectual property rights. The franchisor does not wish to enter into negotiations with you, provide you with a franchise agreement, a disclosure document, perhaps financial statements, and other confidential information, thus educating you on the secrets that led to the franchisor’s success in the marketplace, only to have you back out of the deal and form a competing business across the street.

In Ontario, there can be no deposit agreements entered and no deposit made until the franchisor has made disclosure according to the Arthur Wishart Act, and waited the requisite 14-day period after disclosure.

In Alberta, a deposit can be taken before disclosure and a deposit agreement entered (usually with confidentiality provisions included), but the deposit must be no more than 20 percent of the franchisor’s initial franchise fee and it must be fully refundable if the franchisee chooses not to proceed.