Yes, but only under the conditions in your franchise agreement and, in provinces with franchise legislation, they must follow the rules of franchise legislation. Ontario, Alberta, British Columbia, Manitoba, New Brunswick, PEI all have franchise legislations. Franchisees have more protections in these provinces, but even in provinces without franchise laws: the contract governs, but courts still expect reasonable notice and good faith.
Notice Requirements
Most franchise agreements require the franchisor to provide written notice of default and allow you time to fix the issue. This is called a 'cure period' and it is often 15-30 days. If the issue isn't fixed, termination may follow. There are more serious breaches such as fraud, criminal activity and abandonment where no cure period is required.
Examples of Termination with Cause. These are the most common and enforceable.
- Non-payment of royalties, ad fund contributions, or other required fees.
- Failure to follow operational standards, operating procedures, or brand guidelines.
- Unauthorized transfer or sale of the franchise without franchisor approval.
- Abandonment or closure of the business.
- Fraud, misrepresentation, or illegal activity that damages the brand.
- Repeated defaults (even if cured before, some agreements allow termination after multiple breaches).
- Bankruptcy or insolvency of the franchisee.
Termination Without Cause is rare and very restricted in Canada. Franchisors have a contract to follow, too, and Canadian courts generally don't support franchisors being able to terminate "at will." Franchisors are expected to act in good faith in all provinces, which offers peace-of-mind for franchisees who are doing things right. Termination without cause can be very risky for the franchisor.
Note that an agreement that allows the franchisor to terminate at the end of the term if they choose not to renew is different from the scenarios above. As always, this is important information to discuss with your franchise lawyer before signing the contract.