Just Not Ready? Raibex Decision Makes Post-Agreement Location Selection A Fatal Error

We recently wrote about the Ontario Superior Court's decision in Raibex v ASWR Franchising Corp., a summary judgment decision in a rescission case where the franchisor's failure to include a copy of the head lease and development costs specific to the location was found to be a fatal deficiency in the disclosure document, despite the fact that the location was expressly to be determined after the franchise agreement was signed.

The decision introduces unheard of new disclosure obligations, including the concept that disclosure may be "premature" if a franchisor does not yet know all potentially material facts about the franchise to be granted or those facts do not exist. In Raibex, the Court suggested that a franchisor in such a situation is "not yet ready" to disclose and "must wait" before delivering a disclosure document. This decision has potentially drastic impact for franchisors in Ontario, many of whom follow the longstanding and common practice, long thought