Franchising and Distribution


We provide local and international franchisors, buying groups, distributors, retailers, and manufacturers with the legal services they need to improve their business model, optimize supply, grow their network, improve their product and services distribution, and strengthen their brand identity.

The experienced professionals in our Franchise and distribution group will help you launch, develop, and support your franchise network, regardless of your industry sector. The in-depth knowledge of our franchise experts, combined with that of other professionals in our firm, will ensure that you have the practical advice you need to deal with any issue that could affect the development and operation of your franchise network, in Canada or abroad. Knowing that our clients are committed to the success of their franchisees, we also feel it is vital to help them create an effective infrastructure.

Whether representing franchisors or distributors in structuring the legal and operational aspects of their network, supporting local and international expansion, advising them on questions related to mergers and acquisitions, real estate transactions, trademarks, insolvency, taxation, labour relations, or privacy and competition (anti-trust), or drafting business agreements related to distribution, licensing, or support programs, our goal is to develop creative solutions adapted to the needs of each client.

Our litigation team has extensive experience representing franchisors and distributors in the resolution, arbitration, or litigation of disputes arising from their business relationship with franchisees, suppliers, and others.


  • Start-up, development, and support of franchise networks
  • Development and improvement of distribution networks
  • Licensing, multi-unit franchise, master franchise, partnership, joint venture, and agency agreements
  • Local and international expansion
  • Mergers and acquisitions
  • Employment and labour law
  • Intellectual property
  • Privacy
  • Operational support
  • Insolvency
  • Litigation, dispute resolution, and arbitration
  • Non competition

Representative mandates

  • Support Canadian franchisors in the sale and/or acquisition of franchise systems in Canada
  • Advise a Québec manufacturer and franchisor in the sale of its manufacturing activities and the restructuring of its operations under the Bankruptcy and Insolvency Act
  • Advise venture capital funds and financial institutions concerning the financing of franchise systems in Canada
  • Represent retailers in the negotiation of leases and the acquisition of real estate locations
  • Represent franchisors before civil courts and arbitration tribunals in disputes with franchisees, suppliers, and lessors
  • Advise Canadian franchisors concerning the expansion of their franchise network in the United States, Europe, and Africa
  • Advise Québec franchisors in the start-up of their franchise network in Québec
  • Represent Canadian and/or foreign franchisors (and buying groups) in the expansion of their network in Canada and/or Québec
  • Represent a Québec health care association in the development of networks for the distribution of medical and paramedical services
  • Negotiate and develop infrastructures for the supply, distribution, and/or manufacture of products on behalf of distributors, franchisors, and retailers

Top Ranked Chambers Canada Lavery Lawyers

  1. How to be a Good Franchisor in the COVID-19 Era?

    In recent weeks, and especially in recent days, we have seen the serious repercussions of the spread of COVID-19 on Quebec businesses and SMEs. Government authorities are planning financial assistance measures for businesses, and some chambers of commerce have already announced that new services will soon be offered to businesses to help them deal with the crisis. We are as yet unaware of the details of this assistance and how it will be allocated.  In the meantime, what will happen to companies with a franchise business model that are required to meet certain financial undertakings and standards as part of their day-to-day operations? During these unpredictable and uncertain times, how can you be a good franchisor and support your franchisees? Assistance and guidance from franchisors is important in a situation like this. It can take different forms, some of which are described in this bulletin.  This is an extraordinary opportunity to show franchisees that you are a caring provider that considers the survival of their businesses to be a priority.  Here are a few suggestions for supporting your franchisees over the next few weeks, if not the next few months: Give them a temporary break from their financial obligations under the franchise agreement, both in terms of paying royalties and contributing to the advertising fund. In the short term, this will cause you to lose a source of income. However, it will ease the financial pressure on franchisees and allow them to get through this crisis and eventually return to normal operations. If your franchisees are lessees (whether they have a storefront or shopping centre lease), join them in their negotiations with the landlord to try to obtain temporary flexibility in the terms of their leases, such as a suspension of rent payments, a reduction of payable rent or a deferral of payments that will be spread out over several months once the effects of the COVID-19 crisis have subsided, since rental costs are generally a major expense for franchisees. On the other hand, if as a franchisor you are subletting premises to your franchisee, accept the risk of negotiating payment arrangements or taking on a portion of the rent to temporarily relieve the franchisee’s financial burden. Work in collaboration with franchisees to modify their services (take-out food, virtual workout program for gym clients, delivery, increase in online offerings, etc.) while respecting your standards and requirements in order to maintain consistency between the franchises. Allow your franchisees to temporarily cease operations or reduce business hours to minimize certain expenses such as payroll and supply (in this regard, we invite you to read The Coronavirus Guide for Employers: Everyday Measures for the Workplace). Revise some of your standards and policies and provide updates to be adopted by your franchisees (particularly for hygiene and sanitation). Take advantage of these turbulent times to develop new virtual training courses, encourage franchisees to participate in continuing training activities during this period by offering free webinars, or set up virtual brainstorming sessions to innovate and plan for after the COVID-19 pandemic. Temporarily share a portion of supplier rebates with your franchisees, if your franchise concept allows you to collect rebates directly with no obligation to remit them to the franchisees. Develop a marketing strategy for current services or a new temporary offering during the crisis in order to maintain brand visibility. For the benefit of your franchisees, renegotiate certain agreements with suppliers to get better services or rates (e.g. telephone service, internet, inventory, percentage discount on goods useful for operating the business). Facilitate your franchisees’ discussions with their financial institutions, which are currently sensitive to the tense financial situation of Quebec entrepreneurs and willing to find solutions. If you have an online sales platform, establish a policy that allows franchisees to benefit from it, at least temporarily, either by sharing a certain portion of revenues or, for example, delivering to the franchisee closest to the consumer. For franchisees that, tragically, will not have the financial capacity to overcome the crisis, support them through the end of their operations and transition, in order to minimize their losses. If necessary, offer your franchisees phone or virtual assistance and provide them with contacts who can answer their questions and support them. Provide the public with a general message on the status of your network’s products and services offering, and showcase your support to your franchisees in order to convey a clear and consistent message that will sustain your brand and approach. Most of these proposals involve a greater financial commitment on the part of the franchisor. However, it is important to remember that a franchisor has an obligation to collaborate and partner with its franchisees. Of course, no one is bound to achieve the impossible. A franchisor’s capacity to adequately support its franchisees during this difficult period will serve its interests and those of the network in the longer term. Assistance provided by the franchisor will allow more franchisees to survive and resume their activities when the situation improves. The franchisor’s support and, particularly, flexibility with respect to financial obligations arising from the franchise agreement will send a clear message to franchisees that they are not left to fend for themselves during this period of uncertainty, and a greater climate of trust will be established in your franchisor-franchisee relationship.  Moreover, all sectors of Quebec’s economy are affected by the pandemic and a solidarity movement is being established among institutions, financial partners and businesses to implement solutions and strategies to promote trade and the resumption of economic activities. We are following developments on a daily basis. Our franchising and distribution team and all our professionals are at your disposal and offer you their expertise in advising and supporting you in meeting the challenges that the current COVID-19 situation may create for your network. Please do not hesitate to contact us. It will be our pleasure to collaborate to find a solution that is right for YOU. It’s time to stand together!

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  2. 5 keys to successfully sell your franchise system

    Though it doesn’t happen often, some franchisors start a franchise system with the goal of selling it in the short or medium term. However, the quality of the infrastructure required to build a viable franchise system and the amount of resources (financial or other) that need to be invested over time is likely to lead such franchisors to reconsider their initial goal and either develop a strategic partnership or simply cave in and sell their franchise system to a competitor. Given that a potential partner or buyer will likely carry out due diligence to substantiate the business opportunity, it is preferable to determine what issues may compromise or interrupt negotiations and try to resolve them in advance. Identifying issues in the relationship with franchisees and making the necessary adjustments Before thinking of selling all or part of your franchise system, you should assess the quality of your franchisees and your relationship with them. If you have conflicts with some of them, it is high time to resolve them. Unless faced with an isolated case that you have already taken steps to resolve, your potential partner or buyer may react negatively upon learning that some franchisees in your system are critical of the franchisor and may fear the impact that claims could have on the franchisor’s image, concept and brand. The most frequent criticisms against franchisors are related to a lack of support and collaboration, a lack of transparency in the use of national advertising funds, a concept and/or operations that aren’t viable, and the belief that the franchisor does too little for its franchisees. To learn if your system harbours any such criticisms, you should not visit your franchisees only to assess the quality of their operations. You should give them the opportunity to openly discuss the challenges and situations they face with your management team. It is always better to get franchisees to confide directly in their franchisor rather than letting dissatisfied franchisees discuss their points of contention between themselves. A better understanding of the state of your franchise system will make it possible for you to be more transparent in disclosing the issues underlying a potential transaction to your prospective buyer. Even if such transparency may lead to a lower sale price, it avoids the financial consequences of incomplete or inaccurate representations that you may make to the future buyer and helps to maintain trust. Reviewing and structuring documentation As part of its due diligence, the buyer and its lawyers and financial advisors will review all key aspects of the franchisor’s system, including contracts (franchises, leases, suppliers, etc.), intellectual property and accounting. Missing or incomplete documentation will likely discourage the buyer and justify a reduction in the sale price, or, even worse, withdrawal from the proposed transaction. It is therefore essential, before the buyer’s due diligence begins, that you instruct your resources to verify that your documentation is compliant and reliable, correct any deficiencies and obtain missing information, if any, even if it means hiring external consultants. Compiling your system’s financial information A potential buyer will undoubtedly want to analyze your financial statements and tax returns. It is also very likely that it will want to consult accounting records and verify some key performance indicators. Thus, your system’s monthly sales (compared to those of previous years), geographic trends, how profitable franchisees’ operations are and how frequently they pay their royalties will certainly be of interest to a buyer. In addition, a diligent buyer will pay close attention to a franchisor’s contractual obligations towards third parties, such as lessors and suppliers, and any warranties that it may have made to third parties. In short, full and structured disclosure of the financial information underlying your system will make it easy to demonstrate future profitability. Negotiating an advantageous Earn-out clause Negotiating the sale price of a franchise system can be done in different ways. In addition to the traditional EBITDA valuation of the business, it is not unusual for a franchisor (whose management will ensure an operational transition after the sale) to negotiate an upward adjustment to the sale price should the franchisor achieve, after a determined post-transaction period, better financial results than those on which the buyer based its valuation of the sale price (the “Earn-out”). For example, the sales agreement could provide that a sum equal to the increase in EBITDA that the franchisor achieves during the Earn-out period, multiplied by the EBITDA multiple applied to the transaction, be paid in addition to the sale price. Limiting the chances of your transaction failing by choosing a suitable buyer Make no mistake: a transaction isn’t concluded upon signing a letter of intent. There’s still a long way to go. A multitude of conditions in favour of the buyer generally need to be fulfilled in order for the transaction to proceed. Stipulated time limits often need to be extended by mutual agreement for the parties involved to cover all bases and close the sale. This doesn’t mean that you must consent to all the buyer’s requests to extend time limits. While delays in a transaction are usually well-founded, sometimes a buyer tries to buy time in order to exert pressure on the seller, or it will do so to finish due diligence that it deliberately made more complicated in order to find arguments justifying a decrease in the sale price./p> To avoid such an unfortunate situation, it is in your interest to be well informed about your potential buyer and how it handled past transactions. To assist you and make the best of your business model, feel free to contact a professional of our team!

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  3. The 5 key factors to consider before becoming a franchisor

    Our team is frequently consulted by entrepreneurs asking the following question: we want to franchise our business concept, so where do we start? One of the most common scenarios involves a very enthusiastic customer approaching the owner of a new business concept with some local success (such as a restaurant) and offering to buy a franchise. It is quite common for the business owner to quickly accept this offer in hopes of becoming the next Subway. Unfortunately, many entrepreneurs do not realize that successfully running one or two locations requires very different skills and abilities than those required to develop a franchise network. So, rather than becoming the next Fred Deluca, they are soon faced with challenges resulting from the poor choice of franchisees, inefficient locations, an ineffective supply system and the inability to maintain a uniform concept with the few franchisees they have managed to recruit. As a result, one or more franchisees will most likely stop paying their royalties, close their doors and, guess what – blame the franchisor for the losses incurred. Having represented several franchisors over the past 15 years, we recommend that entrepreneurs pursue the franchise business model only if they are able to meet the following criteria: 1. The concept is viable and the business model is profitable The fact that one location is generating a profit does not guarantee that the concept is viable or that the business model is profitable. In order to be able to draw such conclusions, we strongly recommend that entrepreneurs run at least two, or ideally three, corporate branches (regardless of concept type) in different markets for a period of at least 18 months. Like any entrepreneur, a franchisee normally assumes some business risks related to the choice of location of the franchise and the quality of its operations. However, the franchisee should not share, or suffer from, business risks related to assessments that the franchisor should carry out before granting the franchise.Like any entrepreneur, a franchisee normally assumes some business risks related to the choice of location of the franchise and the quality of its operations. However, the franchisee should not share, or suffer from, business risks related to assessments that the franchisor should carry out before granting the franchise. 2. The concept and business model can be replicated Ideal demographics and geographic locations, supply costs (or sources), elements that may be difficult to replicate and even the unique expertise or charisma of the founder are all factors that influence the success of a business concept and should be taken into consideration before developing a franchise network. The franchisor must have a business concept that a qualified franchisee can operate without being in the same shoes as the franchisor. New franchisees, who will have different business experience than the founder in most cases and whose franchises will be located in different markets than the original, must still be able to easily replicate the franchisor’s concept with the same success by following the system that the franchisor carefully laid out in advance. 3. Recruiting franchisees is actually possible Wanting to sell franchises is an admirable goal, but there must also be a sufficient pool of candidates who meet the franchisor’s selection criteria. For example, franchising a shoe repair shop might seem like a good idea, in order to standardize customer service and modernize the environment in which this type of service is offered. Nevertheless, using the same example, it is important to determine whether there are enough candidates in the trade to consider developing a franchise network in the industry and to ensure that some shoemakers are ready and willing to convert their current businesses to franchises and continue operating under the branding of a third party. 4. The franchisor’s team has sufficient resources to properly train and support the franchisees Our team was recently called upon to resolve a franchisor-franchisee dispute that perfectly illustrates the issues that can arise from a lack of experience or resources on the part of the franchisor. The franchisor fell victim to the enthusiasm of many prospective franchisees for its seemingly viable concept and profitable business model and collapsed shortly after starting its franchising operations. After franchising some 20 businesses in a short period of time, the lack of support from the franchisor in choosing locations and layout, a poor understanding of key industry performance indicators, a flawed supply system and incomplete initial training of franchisees led to the collapse of the network. Even if it means slowing down the pace of development, franchisors must ensure that they have sufficient infrastructure in place to support the growth of the network. Poor choices made while developing a franchise network can have negative effects for several years, not to mention the impact these choices can have on the future success of the franchisor. 5. The franchisor has sufficient financial resources Developing a franchise network in accordance with the above recommendations requires excellent capitalization. The initial franchise fees and royalty payments from the first franchisees are not enough for the franchisor to cover the development of sufficient infrastructure to ensure the viability of the network. The vast majority of franchisors who have challenged this basic rule are now facing serious difficulties.

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  4. How to expand your franchise network in Quebec?

    In the latest edition of the Franchise Voice magazine published by the Canadian Franchise Association (CFA), discover the article "Franchising in Quebec", illustrating some of the particularities that distinguish Quebec from other Canadian provinces in the Franchise industry. Whether you are a Canadian or foreign franchisor, this article written by our professionals reviews the legal essentials to grow your franchise Quebec project : Read and download this publication

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  1. Lavery Lawyers represents MTY in the acquisition of the Yuzu Sushi franchise network

    On July 16, MTY formalized the acquisition of Yuzu Sushi, a fast-growing franchise network with more than 100 sushi restaurants and counters in Quebec and New Brunswick. Representing our franchise expertise, a Lavery team spearheaded by Guillaume Synnott, Jean-Sébastien Desroches, Pierre-Olivier Valiquette and Chantal Desjardins was pleased to support MTY in this transaction by proposing a multi-service offer that included our business law and intellectual property groups. MTY owns a large number of restaurant chains including Scores, Mikes, Ben & Florentine, Thaï Express, Sushi Shop and Giorgio Ristorante. In total, these chains have approximately 6,000 franchised and corporate restaurants, mainly in Canada and the United States. 

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  2. Jean-Philippe Turgeon moderates the Lavery Franchisor Round Table

    Jean-Philippe Turgeon, a partner and head of the Franchising and Distribution group, moderated a round table for franchisors organized by Lavery and held on November 3 at the Lavery Conference Centre in Montréal. The round table was entitled Les enjeux les plus importants dans l’exploitation d’un réseau de franchises and included Julie Bergevin, Vice President, Groupe Adèle inc., Gaétan Migneault, President and Founder, Group Adèle inc. and Steve Morency, President and Owner, Gestion Yuzu inc. Franchisors present learned about the most significant challenges and problems facing franchise networks as well as various possible solutions.  

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  3. Jean-Philippe Turgeon appointed to the CQF Executive Board

    On May 26, Jean-Philippe Turgeon, a partner and head of the Franchising and Distribution group, was appointed to the Executive Committee of the Conseil québécois de la franchise (CQF) as well as Vice President of Legal Affairs. As such, his role will be to promote and represent franchising in Quebec while ensuring the good governance of the organization. Mr. Turgeon will remain a member of the board of directors. Lavery’s Franchising and Distribution group provides local or international franchisors, buying groups, distributors, retailers and manufacturers with the legal services they need to improve their business model, optimize supply, grow their network, improve their product and services distribution, and strengthen their brand identity.

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