Franchise legislation in Canada (BC, Alberta, Manitoba, Ontario, New Brunswick and PEI) requires the information contained in a franchisor’s disclosure document (“FDD”) to be updated at various times.
Follow these steps to ensure that your document is up-to-date:
- A franchisor needs to ensure that certain information, such as its list of franchisees, is current as of the date of the FDD. This means that, every time the FDD is updated, the list should be too.
- There is certain information that needs to be updated as of the fiscal year-end of the franchisor. This includes information regarding the ad fund and store closures.
- The financial statements appended to the FDD must be updated within 6 months of the franchisor’s fiscal year end.
- The FDD must be updated at any time that a material change occurs. There may be circumstances where a Statement of Material Change can be used as a stop-gap to updating the FDD, but best practice is to roll the material change into the current version of the FDD without delay.
Compliance with the technical requirements of provincial franchise legislation has been proven time and again to be of the utmost importance in avoiding rescission claims by franchisees.