Are you concerned about franchise law changes? In this article, Joseph Adler, a franchise lawyer, talks about how there is more improvement for improvements to franchise law. We found this helpful Q+A about franchise law. See the guide.
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As someone who’s been closely watching how franchise law evolves—and sometimes struggles to keep pace with the realities of the market—there’s no denying the importance of recent reforms.
The legislation has introduced key updates that aim to balance the scales between franchisors and franchisees, but speaking from experience, there’s a lot left on the table.
One of the most critical shifts in franchise law in the past few years has been the focus on disclosure requirements. These changes are significant in theory—transparency is vital when entering a long-term business relationship with high stakes.
Disclosure laws
But here’s the thing: disclosure laws are only as good as their enforcement. I’ve seen situations where franchisees were handed disclosure documents packed with legal jargon and intentionally vague statements. They check the compliance boxes but don’t give prospective franchisees the clarity they need.
For example, I recently consulted with a client who’d signed onto a popular fitness franchise. The disclosure outlined the costs and fees on paper, but it buried critical details about required marketing contributions and unspoken pressure to upgrade equipment every two years. They didn’t catch these until after signing, leaving them struggling to make ends meet.
The law requires disclosure, but it doesn’t mandate clarity. That’s a gap that no legislative tweaking has managed to fix.
Franchise Law Changes – Handling franchise termination
Another area where we’re seeing progress—but not enough—is handling franchise termination. The reforms have aimed to reduce the imbalance of power that allows franchisors to terminate agreements at their discretion, often leaving franchisees in financial ruin.
I worked on a case where a franchisee had their agreement terminated for what the franchisor called “non-compliance,” though the infraction was as minor as the late submission of a quarterly report. While the new rules provide some protection, they don’t fully address how ambiguous these clauses remain in most franchise agreements.
This lack of teeth in the law leads to another point: franchisees often lack the financial or emotional resources to challenge franchisors. Even if the reforms promise a level playing field, the reality is that few small-business owners are willing to engage in prolonged legal battles against corporations with deep pockets.
Unless enforcement mechanisms are paired with accessible, affordable dispute resolution, the laws will remain, for many, a theoretical protection rather than a practical one.
Operational standards within franchise systems
What’s also troubling is how little attention has been paid to ongoing operational standards within franchise systems. Franchisors still have broad discretion over supply chain management, leaving franchisees vulnerable to sudden price hikes or supply shortages.
A close friend running a restaurant franchise had to absorb skyrocketing ingredient costs because the franchisor had exclusive vendor contracts. The franchisee couldn’t source from alternative suppliers, even when they could get better deals elsewhere. Franchisees face These everyday struggles, and the current laws barely scratch the surface of these operational dynamics.
But let’s not ignore the positives. One area where reforms have genuinely impacted is in the area of renewals. I’ve seen several cases where franchisees had their agreements renewed under terms significantly more favourable than what would have been possible just a few years ago. The laws now offer franchisees a better chance to negotiate, particularly if they’ve proven their business’s value over time.
Franchise Law Changes
Looking forward, what’s clear is that more needs to be done to address the nuances of franchising. From redefining what “good faith” means in these relationships to making disclosures more accessible, there are plenty of opportunities for improvement.
What I’d like to see—both as someone who’s worked on these issues and as a franchise enthusiast—is a move toward giving franchisees a stronger voice in the legislative process.
Until then, franchise law will continue to lag behind the realities of running a franchise business. Whether you’re a lawyer, a franchisor, or someone considering buying into a system, it’s vital to understand what’s written in the law and the gaps that could leave you vulnerable. There’s a long road ahead, but at least the conversation is moving in the right direction.
I’d love to hear your take on whether you’ve been involved in franchising—whether on the legal side or as a business owner. What do you think the next step for reform should be? What do you think of the changes in franchise law?
