Question: What happens if a Franchise Agreement is terminated before it is signed?
Answer:If a Franchisee decides to terminate the agreement before signing, usually during the “cooling off” period, the Franchisor must return any monies paid by the potential Franchisee to the Franchisor minus any expenses that have been disclosed by the Franchisee. The Franchisor must also obtain a signed statement from the potential Franchisee acknowledging this, and that they have had a reasonable amount of time (i.e. 14 days) to read and understand the Franchising Code of Conduct, the Franchise Agreement (in the form it is to be executed) and the Disclosure Document.
For more information check out our article for franchisees on what to do before you sign a Franchise Agreement, and our other article on terminating the Franchise Agreement.
