Franchisors Beware: Rescission May Operate As The Franchisee’s Insurance Policy

National Post:

Outside the franchise context, equity commonly has a place in legal disputes. Even where the defendant has committed a legal wrong, courts consider whether there is anything about the plaintiff’s conduct that should excuse what the defendant may have done or that would make it “inequitable” (essentially, unfair) for the plaintiff to obtain some or all of the relief requested. This can include whether the plaintiff has come to court with “unclean hands” and whether the plaintiff has waived its rights or acquiesced in the infringement of its rights.

Not so in rescission cases under Canadian franchise statutes like Ontario’s Arthur Wishart Act. With very few exceptions, if a franchisor doesn’t provide a prospective franchisee with a disclosure document 14 days before the franchisee signs an agreement or pays any money to the franchisor, then the franchisee may rescind the franchise agreement. End of story.

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