Disclosure – Can You Demonstrate Your Compliance

For a franchisor operating in Alberta or Ontario, if a dispute arises between the franchisor and a franchisee over receipt of the franchisor’s disclosure document, it will not be sufficient for the franchisor to simply say that the required disclosure document was provided to the franchisee in accordance with the applicable franchise legislation. The franchisor must be able to produce evidence that establishes not only the franchisee’s receipt of the disclosure document, but also the date of receipt and precisely what was received by the franchisee.

In the recent Alberta decision in Rocha v. Panda Flowers (1999) Ltd., the franchisee, Mr. Rocha, claimed that the franchisor, Panda Flowers, failed to make proper disclosure in accordance with the Alberta Franchise Act, such that he was entitled to rescind his franchise agreement and receive repayment of the partial franchisee fee paid to Panda Flowers.