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The Franchise Letter of Intent serves as a crucial preliminary step in Canadian franchise transactions, establishing the framework for negotiations between franchisors and potential franchisees. This document is typically used when parties have progressed beyond initial discussions but aren't yet ready for a formal franchise agreement. It outlines key commercial terms, confidentiality obligations, and exclusivity periods while maintaining a primarily non-binding nature. The document must align with Canadian franchise legislation, which varies by province, with Ontario, Alberta, British Columbia, Manitoba, New Brunswick, and Prince Edward Island having specific franchise laws. While not legally required, a well-drafted Letter of Intent helps prevent misunderstandings and provides structure to the negotiation process, making it a valuable tool in franchise development.

1. Date and Parties: Identification of the proposed franchisor and franchisee, including full legal names and addresses

2. Expression of Interest: Clear statement of the parties' intention to enter into franchise discussions and negotiations

3. Basic Terms: Key commercial terms including proposed territory, franchise fee, and basic business model

4. Due Diligence Period: Timeframe and process for conducting due diligence investigations

5. Confidentiality: Binding provisions regarding the confidential treatment of disclosed information

6. Exclusivity: Period during which the franchisor will not negotiate with other potential franchisees for the same territory

7. Timeline: Proposed schedule for negotiations, due diligence, and execution of final agreements

8. Non-Binding Nature: Clear statement that the LOI is non-binding except for specified provisions

9. Termination: Circumstances under which the LOI can be terminated and the process for doing so

10. Governing Law: Specification of Canadian law and relevant province governing the LOI