Watch The Extra Step... When Crossing The Resale Exemption Path

Section 5(7)(a)(iv) of the Arthur Wishart Act (Franchise Disclosure), 2000 ("AWA"), states that disclosure obligations do not apply to a franchisor in circumstances where there is a grant of a franchise by an existing franchisee to another person if the grant of the franchise is not effected by or through the franchisor (the "Resale Exemption"). For greater certainty, Section 5(8) of the AWA provides that a grant is not effected by or through a franchisor merely because, (a) the franchisor has a right, exercisable on reasonable grounds, to approve or disapprove the grant; or (b) a transfer fee must be paid to the franchisor in an amount set out in the franchise agreement or in an amount that does not exceed the reasonable actual costs incurred by the franchisor to process the grant. In other words, the resale exemption is intended to operate in circumstances where an existing franchisee sells its franchise business to a prospective franchisee with minimal involvement