11. (1) Pursuant to subsection 13 (2) of the Act, a franchisor that meets the following criteria is exempt from the requirement to include the financial information described in clause 3 (1) (a) or (b) or subsection 3 (2) or (3) of this Regulation in a disclosure document, subject to the conditions set out in subsection (3): 1.  The net worth of the franchisor on a consolidated basis according to its most recent financial statements that have been audited or for which a review engagement report has been prepared, i.  is at least $5,000,000, or ii.  is at least $1,000,000, if the franchisor is controlled by a corporation whose net worth on a consolidated basis according to its most recent financial statements that have been audited or for which a review engagement report has been prepared is at least $5,000,000. 2.  The franchisor, i.  in the five years immediately preceding the date of the disclosure document, has at least 25 franchisees engaging in business at all times in Canada, ii.  in the five years immediately preceding the date of the disclosure document, has fewer than 25 franchisees engaging in business at all times in Canada and has at least 25 franchisees engaging in business at all times in a single jurisdiction other than Canada, iii.  does not meet the requirements of subparagraph i or ii, but is controlled by a corporation that meets the requirements of subparagraph i, or iv.  does not meet the requirements of subparagraph i or ii, but is controlled by a corporation that meets the requirements of subparagraph ii. 3.  The franchisor, i.  has engaged in the line of business associated with the franchise continuously for not less than five years immediately preceding the date of the disclosure document, or ii.  is controlled by a corporation that meets the requirements of subparagraph i. 4.  In the five years immediately preceding the date of the disclosure document, the franchisor, the franchisor’s associates, and the directors, general partners and officers of the franchisor, i.  in the case of a franchisor described in subparagraph 2 i or iii have not had any judgment, order or award made in Canada against any of them relating to fraud, unfair or deceptive practices, or a law regulating franchises, including the Act, or ii.  in the case of a franchisor described in subparagraph 2 ii or iv have not had any judgment, order or award made in Canada or in the jurisdiction referred to in subparagraph 2 ii against any of them relating to fraud, unfair or deceptive practices, or a law regulating franchises, including the Act.  O. Reg. 581/00, s. 11; O. Reg. 611/00, s. 3; O. Reg. 69/04, s. 5; O. Reg. 199/05, s. 2 (1-6). (2) Financial statements of a franchisor mentioned in paragraph 1 of subsection (1) shall, (a)  if the financial statements are audited, be prepared in accordance with generally accepted auditing standards as set out, (i)  in the CPA Canada Handbook — Assurance, (ii)  by the Auditing Standards Board of the American Institute of Certified Public Accountants or the Public Company Accounting Oversight Board of the United States, as applicable, or (iii)  by the International Auditing and Assurance Standards Board; and (b)  if a review engagement report has been prepared for the financial statements, be prepared in accordance with generally accepted accounting principles that meet the review and reporting standards applicable to review engagements as set out, (i)  in the CPA Canada Handbook — Accounting, (ii)  by the Financial Accounting Standards Board of the United States, or (iii)  by the International Accounting Standards Board.
O. Reg. 199/05, s. 2 (7); O. Reg. 418/20, s. 5. (3) An exemption described in subsection (1) ceases to be effective if, (a)  the franchisor ceases to meet the exemption criteria set out in paragraph 1 of subsection (1); (b)  the franchisor no longer meets any of the following conditions: (i)  the franchisor has at least 25 franchisees engaging in business at all times in Canada, (ii)  the franchisor has fewer than 25 franchisees engaging in business at all times in Canada and has at least 25 franchisees engaging in business at all times in a single jurisdiction other than Canada, (iii)  the franchisor does not meet the conditions of subclause (i) or (ii), but is controlled by a corporation that meets the conditions of subclause (i), or (iv)  the franchisor does not meet the conditions of subclause (i) or (ii), but is controlled by a corporation that meets the conditions of subclause (ii); (c)  the franchisor ceases to engage in the line of business associated with the franchise; (d)  in the case of a franchisor described in subparagraph 3 ii of subsection (1), the franchisor ceases to be controlled by a corporation that engages in the line of business associated with the franchise; (e)  in the case of a franchisor described in subparagraph 2 i or iii of subsection (1), a judgment, order or award relating to fraud, unfair or deceptive practices, or a law regulating franchises, including the Act, is made in Canada against any of the franchisor, the franchisor’s associates, and the directors, general partners and officers of the franchisor; or (f)  in the case of a franchisor described in subparagraph 2 ii or iv of subsection (1), a judgment, order or award relating to fraud, unfair or deceptive practices, or a law regulating franchises, including the Act, is made in Canada or in the single jurisdiction other than Canada referred to in subparagraph 2 ii of subsection (1) against any of the franchisor, the franchisor’s associates, and the directors, general partners and officers of the franchisor.  O. Reg. 199/05, s. 2 (7). Part IV   Delivery of documents