Cancelling a Franchise Agreement in Ontario: Your Rights Under the Arthur Wishart Act
This article is for informational purposes only and does not constitute legal advice. Every legal situation is unique — consult a licensed lawyer before making any legal decisions.
Quick Answer
In Ontario, a franchisee may be able to cancel a franchise agreement under the Arthur Wishart Act (Franchise Disclosure), 2000. Section 6(1) allows cancellation within 60 days of receiving a late or non-compliant disclosure document. Section 6(2) allows cancellation within two years of signing where no disclosure document was ever provided.
In Ontario, a franchisee may have a statutory right to cancel a franchise agreement. This is legally called rescission, under the Arthur Wishart Act (Franchise Disclosure), 2000. The Act generally requires a franchisor to deliver a complete disclosure document at least 14 days before the franchisee signs anything or pays anything.
Under section 6(1), a franchisee may rescind the franchise agreement within 60 days of receiving the disclosure document, if the franchisor failed to provide it within the required time or its contents fell short of the Act’s requirements. Under section 6(2), a franchisee may rescind the franchise agreement within two years of entering the franchise agreement where the franchisor never provided a disclosure document. Ontario courts have held that a document so deficient it amounts to no disclosure may fall under this longer window, though the threshold is high. Where rescission is valid, section 6(6) requires the franchisor to refund money paid, buy back inventory, supplies and equipment, and compensate the franchisee for losses in acquiring, setting up and operating the franchise.
You Signed the Papers. What Were You Supposed to Get First?
For many people in Toronto, Scarborough, and across the GTA, a franchise could be the first business they’ve ever owned. Getting a franchise can be appealing. Somebody else has already solved the hard parts: the branding, supplies, training, and systems. All you have to do is supply the capital and labour.
Then, the numbers stop cooperating. Royalties come due whether the location is busy or quiet. Build-out costs land higher than the estimate. Meanwhile, somewhere in a drawer sits a binder you signed at the franchisor’s office, on the franchisor’s schedule, that you have never read straight through.
Ontario law puts a specific obligation on franchisors before any agreement or payment happens, and that legal burden rests on them, not you. This article covers what a franchisor must provide, when to provide it, and what the law may open up if they failed to deliver it.
Pick Your Path: Which Situation Matches Yours?
Your position under Ontario franchise law typically turns on one question: what did the franchisor provide, and when. Four situations come up most often, and each points to a distinct part of the Arthur Wishart Act (Franchise Disclosure), 2000, the statute governing franchise sales in Ontario.
You never received a disclosure document at all. This is what section 6(2) speaks to directly, and it may open the longer of the two windows below.
You received one on or near the day you signed. The issue here is timing rather than content, and section 6(1) is typically the provision in play.
You received one well in advance, but pieces appear to be missing. How serious those gaps are is a genuinely contested question, covered below.
You bought an existing location from another franchisee. Some resales are exempt under section 5(7), though courts read those exemptions narrowly. Nihang Law handles franchise litigation for franchisees across the GTA.
What the Arthur Wishart Act Requires Your Franchisor to Give You
In Ontario, a franchise disclosure document is a package of information that a franchisor, the company licensing its brand and system, must give a prospective franchisee, the person buying the right to operate under it, before any agreement relating to the franchise is signed or any money changes hands. Delivery is generally required at least 14 days in advance.
Section 5(4) sets out the required contents: all material facts, including those prescribed by regulation; financial statements as prescribed; copies of every agreement the franchisee is asked to sign; prescribed statements supporting an informed investment decision; and other prescribed information. Section 5(6) mandates that everything must be set out accurately, clearly and concisely.
If a significant change occurs after delivery, the franchisor must also provide a written statement of material change before any signing or payment occurs.
However, there are exemptions. Sections 5(1.1) and 5(7) carve out certain situations, and a regulation exempts some large, established franchisors from including financial statements. Whether one applies is a question for a lawyer reading the documents, and is a common issue in franchise civil litigation.
| Category | What to look for | Where it comes from |
|---|---|---|
| All material facts | Information about the business, capital or control of the franchisor or the franchise system that could reasonably be expected to affect the value of the franchise or the decision to buy it. | Act s. 5(4)(a) |
| Prescribed material facts | A defined list presented together in one part of the document, including the costs of establishing the franchise, civil liability findings for misrepresentation or unfair practices, bankruptcy or insolvency proceedings in the preceding six years, and restrictions on termination, renewal and transfer. | O. Reg. 581/00 s. 6 |
| Franchisee and location lists | The locations of franchises of the type offered in Ontario, franchisees who left the system in the last fiscal year, and the reasons for closures over the preceding three fiscal years. | O. Reg. 581/00 s. 6 |
| Financial statements | Audited or review engagement statements for the most recently completed fiscal year, prepared to the prescribed standard. Some large, established franchisors may be exempt from this requirement. | Act s. 5(4)(b) · Reg. s. 3 |
| Copies of every agreement | All proposed franchise agreements and other agreements relating to the franchise that the prospective franchisee is being asked to sign. | Act s. 5(4)(c) |
| Prescribed statements | Set statements at the beginning of the document, including a note on commercial credit reports and a recommendation to obtain independent legal and financial advice before signing. | Act s. 5(4)(d) · Reg. s. 4 |
| Dispute resolution statement | A description of any internal or external mediation or alternative dispute resolution process the franchisor uses, together with the prescribed statement about mediation. | O. Reg. 581/00 s. 5 |
| Certificate of disclosure | A certificate stating that the document contains no untrue information and includes every material fact, financial statement and other item the Act and regulation require, signed and dated as prescribed. | O. Reg. 581/00 s. 7 |
| Presentation | Everything in the document set out accurately, clearly and concisely, and delivered as one document at one time. | Act s. 5(6) |
| Statement of material change | Where something significant changes after the disclosure document is delivered, a written statement given before the franchisee signs or pays. | Act s. 5(5), 5(5.1) |
Nihang Law Professional Corporation · Law Society of Ontario
The Two Rescission Windows, Side by Side
Rescission means cancelling the franchise agreement from the beginning, as though it had never been entered, rather than simply ending it going forward. The Act creates two rescission rights. They operate on different timelines, and those timelines start at different moments.
Section 6(1) gives a franchisee 60 days from receiving the disclosure document to rescind, where the document was delivered late or its contents did not meet the requirements of section 5. Section 6(2) gives a franchisee two years from entering into the franchise agreement to rescind, where the franchisor never provided a disclosure document.
Nearly every mix-up in this area comes from blending those two rules. One timeline starts when a document arrives; the other starts when you sign.
| Section 6(1) — late or non-compliant disclosure | Section 6(2) — no disclosure document | |
|---|---|---|
| What triggers it | The disclosure document was delivered outside the time the Act requires, or its contents did not meet the requirements of section 5. | The franchisor never provided a disclosure document. |
| When the timeline starts | When the franchisee receives the disclosure document. | When the franchisee enters into the franchise agreement. |
| How long it runs | 60 days. | Two years. |
| What the franchisee has to show | That delivery fell outside the required time, or that the contents fell short of what section 5 requires. | That no disclosure document was provided, or that what was provided was so deficient it amounts to none at all. |
| How demanding the threshold is | Measured against the requirements of section 5 and the regulation. | Demanding. Ontario appellate authority holds that imperfect disclosure is not the same as no disclosure, and the burden rests on the franchisee. |
Nihang Law Professional Corporation · Law Society of Ontario
Where the line falls between a deficient document and no document
What happens when a disclosure document arrives but is missing important pieces? Ontario courts have accepted that deficiencies can be stark and material enough that what was handed over does not count as a disclosure document at all, bringing section 6(2) into play.
However, the threshold is demanding. In 2018 the Court of Appeal for Ontario set aside a rescission in Raibex, holding that a franchisee relying on section 6(2) must show the document was so deficient the franchisor effectively failed to provide one. Imperfect disclosure is not the same as no disclosure, and the burden of proof rests on the franchisee.
Certain defects have cleared that bar, including non-compliant financial statements and a certificate lacking required signatures. Others have not. Outcomes turn on the document specifics.
How a Rescission Claim Typically Unfolds
A rescission claim generally moves through five stages: gathering documentation, having it reviewed, delivering written notice, waiting out the franchisor’s response period, and going to court if the franchisor does not comply. Each stage carries requirements that shape the next.
- 1Gather everything, with dates.Every version of the disclosure document, the courier slip or email that delivered it, the franchise agreement, the sublease, and payment records. Dates matter more than almost anything.
- 2Have the documents reviewed.A lawyer compares what you received against what section 5 and the regulation require, and identifies which window, if either, may apply.
- 3Deliver a notice of rescission.Under section 6(3), notice must be in writing and delivered in a manner the Act permits. Ontario courts have held a court claim is not itself valid notice, so this step cannot be folded into litigation.
- 4The franchisor’s response period runs.Section 6(6) gives the franchisor 60 days from the effective date of rescission to comply. This is a separate deadline from the 60-day rescission window in section 6(1).
- 5Court, if it comes to that.Where the franchisor disputes the rescission or does not pay, a claim may follow, often pleaded alongside ordinary contract disputes.
Nihang Law Professional Corporation · Law Society of Ontario
What Rescission May Return to You
Where a franchisee has validly rescinded, section 6(6) requires the franchisor, or their associate, to do four things within 60 days of the effective date of rescission. The provision is written to unwind the transaction rather than award damages for a broken promise.
The franchisor must refund money received from the franchisee, other than money paid for inventory, supplies or equipment. It must buy back remaining inventory at the price paid by the franchisee and buy back the supplies and equipment on that same basis. Finally, it must compensate the franchisee for losses incurred in acquiring, setting up and operating the franchise, less the first three categories.
Because those categories accumulate, rescission claims frequently exceed the Small Claims Court’s monetary limit and typically proceed in the Superior Court of Justice.
Rights your franchise agreement cannot take away
The Act imposes a duty of fair dealing on both franchisor and franchisee, requiring each party to act in good faith and in accordance with reasonable commercial standards. It also protects a franchisee’s right to associate with other franchisees.
Section 11 goes further: a purported waiver or release by a franchisee of a right given under the Act is void. That protection is not unlimited, and courts have recognised a narrow exception for releases settling an existing dispute. Post-exit restrictions such as non-compete clauses are worth reviewing alongside any exit.
Common Mistakes Franchisees Make
- ▸Assuming American franchise rules apply. The Franchise Disclosure Document, Item 17 and state franchise statutes belong to a different legal system; Ontario’s requirements come from the Arthur Wishart Act.
- ▸Treating a late disclosure document and a missing one as the same problem, when they engage different provisions and deadlines.
- ▸Continuing to pay royalties, sign renewals or open locations assuming statutory rights stay untouched in the background.
- ▸Signing a release or settlement without advice on how section 11 applies to it.
- ▸Raising rescission for the first time in a court filing rather than by written notice under section 6(3).
- ▸Waiting to have the documents reviewed because the location might still turn around, the same instinct that surfaces when business partners fall out and in other partnership disputes.
Frequently Asked Questions
Can I cancel my franchise agreement in Ontario?
What is a franchise disclosure document, and what must be in it?
How long do I have to cancel a franchise agreement in Ontario?
My franchisor gave me the disclosure document the same day I signed. Does that count?
Do I get my franchise fee back if I rescind?
Can my franchisor make me sign away my right to cancel?
Do I need a lawyer to send a notice of rescission?
Ontario gives franchisees genuine statutory protection, and the duty to disclose sits squarely with the franchisor. What the law cannot do from a distance is tell you whether your own situation fits either rescission window. That answer lives in your documents and their dates.
If you are unsure what you received or when, having the file reviewed is a reasonable next step. Qasim Ali, Principal Lawyer at Nihang Law, leads franchise and commercial litigation at the firm, which serves Toronto, Scarborough and the broader GTA.
Talk to an Ontario Franchise Lawyer Before the Timeline Matters
A review of your disclosure document, your franchise agreement and the dates attached to both can tell you where you stand.
Arrange a document reviewThis article is for informational purposes only and does not constitute legal advice. Every legal situation is unique — consult a licensed lawyer before making any legal decisions. Nihang Law Professional Corporation is licensed by the Law Society of Ontario.
About the author
Qasim Ali
Principal Lawyer · Nihang Law Professional Corporation · Toronto & Scarborough, Ontario · Law Society of Ontario
Qasim Ali is the Principal Lawyer at Nihang Law Professional Corporation, serving clients across Toronto, Scarborough, and the broader Greater Toronto Area. He provides full-service legal representation across immigration, real estate, family law, criminal law, civil litigation, employment law, wills and estates, and business law.
Nihang Law is particularly recognized for its depth in immigration and real estate law — a combination that serves newcomers and growing families navigating both legal systems simultaneously.
Learn more about Qasim Ali →Sources & references
- Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 — consolidated text, in force as amended September 1, 2020 — https://www.canlii.org/en/on/laws/stat/so-2000-c-3/latest/so-2000-c-3.html
- General, O. Reg. 581/00 (under the Arthur Wishart Act), sections 3 to 7 — https://www.canlii.org/en/on/laws/regu/o-reg-581-00/latest/o-reg-581-00.html
- Raibex Canada Ltd. v. ASWR Franchising Corp., 2018 ONCA 62 (Court of Appeal for Ontario) — https://www.ontariocourts.ca/decisions/2018/2018ONCA0062.htm
- Royal Bank of Canada v. Everest Group Inc., 2024 ONCA 577 — https://www.canlii.org/en/on/onca/doc/2024/2024onca577/2024onca577.html
- 4287975 Canada Inc. v. Imvescor Restaurants Inc., 2009 ONCA 308 — https://www.canlii.org/en/on/onca/doc/2009/2009onca308/2009onca308.html
- Government of Ontario — Franchising: information for buyers and owners — https://www.ontario.ca/page/franchising-information-buyers-and-owners
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