Exemption from requirement to include financial statements
8(1)A franchisor is exempt from the requirement in paragraph 5(4)(a) of the Act and subsection 7(1) of this Regulation to include financial statements in a disclosure document if the following conditions apply:
(a)
the franchisor has a net worth on a consolidated basis according to its most recent financial statements, which have been audited or for which a review engagement report has been prepared, which
(i)
is at least $2,000,000, or
(ii)
is at least $1,000,000, if the franchisor is controlled by a corporation whose net worth on a consolidated basis according to its most recent financial statements that have been audited or for which a review engagement report has been prepared is at least $2,000,000;
(b)
the franchisor
(i)
has had at least 25 franchisees engaged in business in Canada at all times during the 5-year period immediately preceding the date of the disclosure document,
(ii)
has had at least 25 franchisees engaged in business in a single jurisdiction other than Canada at all times during the 5-year period immediately preceding the date of the disclosure document,
(iii)
is controlled by a corporation that meets the requirements of subparagraph (i),
(iv)
is controlled by a corporation that meets the requirements of subparagraph (ii),
(v)
has had at least 25 franchisees engaged in business in Canada at all times during a portion of the 5-year period immediately preceding the date of the disclosure document and is controlled by a corporation that had at least 25 franchisees engaged in business in Canada at all times during the remainder of that 5-year period, or
(vi)
has had at least 25 franchisees engaged in business in a single jurisdiction other than Canada at all times during a portion of the 5-year period immediately preceding the date of the disclosure document and is controlled by a corporation that had at least 25 franchisees engaged in business in that jurisdiction at all times during the remainder of that 5-year period;
(c)
the franchisor
(i)
has engaged in the line of business associated with the franchise continuously during the 5-year period immediately preceding the date of the disclosure document,
(ii)
is controlled by a corporation that meets the requirements of subparagraph (i), or
(iii)
has engaged in the line of business associated with the franchise continuously during a portion of the 5-year period immediately preceding the date of the disclosure document and is controlled by a corporation that engaged continuously in that line of business during the remainder of that 5-year period; and
(d)
during the 5-year period immediately preceding the date of the disclosure document,
(i)
in the case of a franchisor described in subparagraph (b)(i) or (iii) or (v), the franchisor, the franchisor’s associates and the directors, general partners and officers of the franchisor have not had any conviction, judgment, order or award relating to fraud or unfair or deceptive business practices made against any of them in Canada, and
(ii)
in the case of a franchisor described in subparagraph (b)(ii) or (iv) or (vi), the franchisor, the franchisor’s associates and the directors, general partners and officers of the franchisor have not had any conviction, judgment, order or award relating to fraud or unfair or deceptive business practices made against any of them in Canada or in the jurisdiction referred to in subparagraph (b)(ii) or (vi).
8(2)If a franchisor relies on an exemption under subsection (1), the Certificate of Franchisor referred to in section 6 shall contain a statement that the franchisor meets the requirements of subsection (1) and is therefore not including financial statements in the disclosure document.
Exemption from requirement to include financial statements
8(1)A franchisor is exempt from the requirement in paragraph 5(4)(a) of the Act and subsection 7(1) of this Regulation to include financial statements in a disclosure document if the following conditions apply:
(a)
the franchisor has a net worth on a consolidated basis according to its most recent financial statements, which have been audited or for which a review engagement report has been prepared, which
(i)
is at least $2,000,000, or
(ii)
is at least $1,000,000, if the franchisor is controlled by a corporation whose net worth on a consolidated basis according to its most recent financial statements that have been audited or for which a review engagement report has been prepared is at least $2,000,000;
(b)
the franchisor
(i)
has had at least 25 franchisees engaged in business in Canada at all times during the 5-year period immediately preceding the date of the disclosure document,
(ii)
has had at least 25 franchisees engaged in business in a single jurisdiction other than Canada at all times during the 5-year period immediately preceding the date of the disclosure document,
(iii)
is controlled by a corporation that meets the requirements of subparagraph (i),
(iv)
is controlled by a corporation that meets the requirements of subparagraph (ii),
(v)
has had at least 25 franchisees engaged in business in Canada at all times during a portion of the 5-year period immediately preceding the date of the disclosure document and is controlled by a corporation that had at least 25 franchisees engaged in business in Canada at all times during the remainder of that 5-year period, or
(vi)
has had at least 25 franchisees engaged in business in a single jurisdiction other than Canada at all times during a portion of the 5-year period immediately preceding the date of the disclosure document and is controlled by a corporation that had at least 25 franchisees engaged in business in that jurisdiction at all times during the remainder of that 5-year period;
(c)
the franchisor
(i)
has engaged in the line of business associated with the franchise continuously during the 5-year period immediately preceding the date of the disclosure document,
(ii)
is controlled by a corporation that meets the requirements of subparagraph (i), or
(iii)
has engaged in the line of business associated with the franchise continuously during a portion of the 5-year period immediately preceding the date of the disclosure document and is controlled by a corporation that engaged continuously in that line of business during the remainder of that 5-year period; and
(d)
during the 5-year period immediately preceding the date of the disclosure document,
(i)
in the case of a franchisor described in subparagraph (b)(i) or (iii) or (v), the franchisor, the franchisor’s associates and the directors, general partners and officers of the franchisor have not had any conviction, judgment, order or award relating to fraud or unfair or deceptive business practices made against any of them in Canada, and
(ii)
in the case of a franchisor described in subparagraph (b)(ii) or (iv) or (vi), the franchisor, the franchisor’s associates and the directors, general partners and officers of the franchisor have not had any conviction, judgment, order or award relating to fraud or unfair or deceptive business practices made against any of them in Canada or in the jurisdiction referred to in subparagraph (b)(ii) or (vi).
8(2)If a franchisor relies on an exemption under subsection (1), the Certificate of Franchisor referred to in section 6 shall contain a statement that the franchisor meets the requirements of subsection (1) and is therefore not including financial statements in the disclosure document.