In Canada, only the provinces of Alberta, British Columbia, Manitoba, New Brunswick, Ontario, Prince Edward Island, and soon, Saskatchewan require franchisors to provide a disclosure document.
But even in Ontario, the Arthur Wishart Act (Franchise Disclosure), 2000 (“AWA”) includes several instances where disclosure may not actually be required.
In plain terms: sometimes the obligation to disclose simply doesn’t apply at all (these are exclusions), and in other cases, franchisors are legally allowed to skip disclosure in specific situations (these are exemptions).
Why it matters
Getting this wrong can cause more than just a paperwork headache. Missteps can delay closings, invite rescission claims, and leave both parties in a tricky position—imagine paying rent on a location you can’t yet operate because the cooling-off period hasn’t expired. On the flip side, properly relying on an exclusion or exemption keeps transactions efficient and compliant, while still protecting everyone involved.
That’s why clear legal guidance is essential. A franchise lawyer can confirm whether disclosure is required, explain how exclusions and/or exemptions apply, and help avoid pitfalls that could derail a deal.
The key categories
Exclusions – The AWA doesn’t apply at all in these cases:
• Certain employment or partnership relationships
• Trademark or certification-style licensing arrangements
• Shared retail spaces where the smaller tenant isn’t required to buy from the larger retailer
• Agreements involving the Crown or its agents
Exemptions – Disclosure rules apply generally, but these scenarios are excused:
• Short-term or small-investment franchises (less than one year or under $15,000)
• Large initial investments over $3 million
• Experienced insiders or existing franchisees expanding their operations
• Multi-level marketing structures
• Franchise renewals or extensions
• Estate sales or bankruptcy proceedings
• Existing franchisee acquiring another unit
• A sale of a franchise by an existing franchisee for the franchisee’s own account, where the franchisor’s involvement is limited and specified conditions are met
The takeaway
Relying on an exemption doesn’t mean a franchisor is cutting corners. It means they’re operating within the law’s boundaries. Still, many choose to disclose anyway for transparency, consistency, and peace of mind.
When in doubt, consult a franchise lawyer early. Understanding when disclosure isn’t required can be just as strategic as knowing when it is.
Special thanks to Rahul Gupta for his assistance in putting this article together.
