Since the opening salvo in the U.S.-Canada trade dispute in early 2025, the measures initially imposed on Canadian goods have been modified by exemptions for CUSMA-compliant goods and supplemented by sector-specific tariffs, including on steel, aluminum and automobiles. In February 2026, the U.S. Supreme Court held that the International Emergency Economic Powers Act did not authorize the broad tariffs imposed under that statute. That decision did not, however, bring the trade dispute to an end, as the U.S. has continued to rely on other statutory authorities to impose tariffs on certain Canadian goods.

Canada’s response has evolved as well. After imposing counter-tariffs beginning in March 2025, Canada removed most of those initial countermeasures effective September 1, 2025, while retaining measures affecting steel, aluminum and automobiles. The dispute has remained fluid, with further U.S. measures and Canadian countermeasures announced as recently as August 2026. The takeaway for businesses is that the tariff rates and products affected at any particular point in time should not be assumed to remain static.

The continuing use of U.S. tariffs and Canadian counter-tariffs has had widespread effects across various industries, including the franchise sector. Franchisors and franchisees must continue to prepare for the legal and business consequences of rising costs, disrupted supply chains and shifting market dynamics. The experience since March 2025 has also shown that tariff planning needs to account for changing rates, exemptions, product coverage and legal authorities.

SUPPLY-CHAIN ANALYSIS

Franchisees that depend on imported goods — whether for equipment, supplies, or inventory — may face substantial cost increases due to tariffs. For instance, tariffs on raw materials, such as steel and aluminum, as well as finished products, will likely drive up operational expenses and delay deliveries, potentially disrupting the system’s supply chain. This will impose increased costs on franchisees, which will necessitate a difficult decision between absorbing such costs, passing them on to customers, or a combination of both. Many franchise agreements also require the use of specific materials and equipment to maintain consistency throughout the system, which may limit (absent franchisor intervention) the ability of franchisees to easily adapt to changing economic circumstances.

Maintaining a strong franchisor-franchisee relationship is key in navigating these changing market conditions. Below are certain key considerations for franchisors in navigating this relationship:

Initial investment: Franchisors must consider whether they should make changes to their initial investment expectations and requirements for franchisees. If tariffs increase the cost of equipment, supplies, or inventory, franchisors should consider reviewing and revising the initial investment estimates to reflect these higher costs. Failure to do so may mislead potential franchisees about their expected expenses. Moreover, failing to account for such changes may be setting franchisees up for failure before they even begin operating.

Ongoing expenses and unit economics: Franchisors should evaluate how tariff-induced cost increases affect their unit economics, including per-location profitability, break-even points, and overall financial sustainability. Clearly presenting this data can help franchisees make informed investment decisions. If tariffs impact ongoing costs, such as supply procurement or vendor agreements, these changes should be disclosed. Franchisees should be made aware of potential cost fluctuations. Franchisors should assess franchisee costs on a market-by-market basis, and prepare to be flexible on procurement where necessary to ensure that franchisees’ unit level economics remain viable in light of this volatility.

Supply chain and sourcing restrictions: If a franchise system mandates specific suppliers affected by tariffs, these restrictions should be transparently disclosed. Franchisors may also explore whether allowing some flexibility in supplier selection can help mitigate disputes, and actively work with franchisees to assess whether domestic alternatives exist that will (while perhaps not entirely consistent with brand standards applicable in the U.S.) allow the franchisee to continue operating without further hardship than is necessary.

Financial performance representations: Franchisors should monitor profit margins and other financial metrics due to tariff-related cost increases and assess whether tariff-related cost increases are a development that impacts financial performance representations. Providing outdated or overly optimistic projections could expose franchisors to legal claims and otherwise adversely impact the franchisor-franchisee relationship.

CONSUMER PRICE SENSITIVITY

Franchisors should also consider whether to authorize or encourage price increases for goods and services. However, price-sensitive consumers may reduce their spending or seek alternatives, particularly in highly competitive industries such as quick-service restaurants, retail, and hospitality. It is critical that franchisors consider balancing necessary price adjustments with consumer expectations in order to maintain brand reputation and profitability. In light of these challenges, franchisors should consider which obligations currently imposed on franchisees are crucial to maintaining brand standards, and which others may be more flexible.

ADAPTION IS KEY

Predictable costs and strong unit economics are the hallmarks of a successful franchise system. While tariffs may create new cost pressures, they also present opportunities for Canadian brands to emphasize domestic production and sourcing, which can resonate with consumers and differentiate them in the market. Similarly, U.S. brands entering Canada may still find opportunities to expand, particularly when the favourable exchange rate helps offset tariff impacts, allowing cost-competitive pricing in the Canadian market. Franchisors and businesses that adapt their supply chains, pricing strategies, and brand positioning to these evolving dynamics can still find opportunities for growth and expansion despite the shifting trade landscape.

OPPORTUNITIES & SHIFTS

While tariffs impose significant challenges for businesses of all stripes, they also provide opportunities to savvy and opportunistic businesses. For example, Canadian franchise systems with predominantly domestic supply chains may reap the benefits of changing consumer preferences towards Canadian-made products, while products previously bound for the U.S. may be sold domestically at the same or lower prices. Franchisors can also re-evaluate global sourcing strategies to mitigate tariff exposure.

To address ongoing challenges, franchisors should consider the following actions:

• Supply-chain diversification: The impending tariffs should prompt franchisors to carefully re-evaluate suppliers and explore domestic alternatives where feasible.
• Negotiating terms: Franchisors and franchisees should also work with suppliers to share or reduce tariff-related cost burdens.
• Efficiency measures: Franchisors and franchisees should invest in technology or streamline operations to offset increased expenses.
• Franchise disclosure and agreement revisions: It is critical that franchisors assess whether franchise disclosure documents and franchise agreements need adjustments to address unforeseen consequences arising from the tariffs.

MADE IN CANADA

While not the primary focus of this article, businesses should keep in mind that promoting products as “Made in Canada” or “Product of Canada,” or highlighting Canadian ownership, can be a valuable strategy for brands seeking to reduce the impact of tariffs between Canada and the U.S. However, businesses must ensure that such claims comply with Canadian law, including the Competition Act, the Consumer Packaging and Labelling Act, and the Textile Labelling Act. These acts prohibit false or misleading representations, and restrict how and when such claims can be used. Businesses that choose to make “Made in Canada” or “Product of Canada” claims must ensure their claims meet the appropriate guidelines and thresholds.

LESSONS LEARNED IN THE FIRST EIGHTEEN MONTHS OF THE DISPUTE

The first eighteen months of the dispute have reinforced that managing tariff risk involves more than deciding whether to absorb an additional cost or pass it along. Tariffs have been introduced, modified, exempted and challenged, sometimes in relatively short order. For franchise systems, a few practical lessons have emerged:

Build flexibility into the supply chain: Domestic sourcing can help reduce exposure, but flexibility may be even more important. Having alternative approved suppliers, products or specifications can give a franchise system more room to respond when tariffs change. It is also important to understand where key inputs actually originate and how they are classified for tariff purposes. Buying from a Canadian supplier, for example, does not necessarily mean that the underlying goods are of Canadian-origin or insulated from tariffs.

Understand who bears the tariff risk: Supplier, distribution and franchise arrangements should make clear who ultimately bears tariff-related cost increases. Just as importantly, the parties should understand what happens if a tariff is later reduced, removed or refunded. The successful legal challenges to certain U.S. tariffs have shown that tariff costs may not always be permanent. This makes provisions dealing with tariff pass-throughs, refunds, rebates and changes in law worth another look.

Disclose volatility rather than try to predict it: The pace of change over the past eighteen months has also demonstrated how difficult it is to predict where tariffs will be months—or even weeks—into the future. Rather than trying to forecast a particular outcome, franchisors should ensure that their disclosure appropriately addresses material exposure to tariffs and other trade measures, particularly where those risks could affect initial investment estimates or financial information.

Look for available relief: Tariffs do not always have to be treated simply as an unavoidable cost of doing business. Government remission, financing and other tariff-relief programs may be available in appropriate circumstances. Where a franchise system has centralized purchasing arrangements, it is worth considering whether the franchisor, supplier, distributor or franchisee is best positioned to pursue that relief before the additional cost is passed through the system.

Plan for more than one outcome: Perhaps the clearest lesson is that tariff planning should not depend on a single prediction about the future of Canada-U.S. trade. Measures have been imposed, modified, exempted, challenged and replaced over a relatively short period. Franchise systems will be better positioned if they test their supply chains and unit economics against a range of tariff, sourcing and pricing scenarios and leave themselves enough flexibility to respond when circumstances change.

How Sotos Can Help

Tariffs can affect much more than the cost of imported goods. For franchise systems, they can also create issues around supplier arrangements, pricing, franchise disclosure, franchise agreements and the allocation of increased costs between the parties.

Sotos LLP advises franchisors and other businesses on the legal and commercial issues that can arise when market conditions change. Our work can include reviewing franchise agreements and disclosure documents, assessing supplier and distribution arrangements, reviewing how tariff-related costs are allocated, and advising on sourcing and pricing issues.

We can also assist businesses with advertising and marketing issues, including the use of “Made in Canada” and “Product of Canada” claims.

If tariffs or other trade measures are affecting your franchise system or commercial arrangements, please contact Jason Brisebois at 416.572.7323 or jbrisebois@sotos.ca, Peter Viitre at 416.977.7754 or pviitre@sotos.ca, or Nicole Perez at 416.977.3674 or nperez@sotos.ca.

About the Authors

Jason Brisebois is a partner at Sotos LLP whose practice includes franchise law, mergers and acquisitions, commercial leasing, privacy and data protection, and advertising and marketing law. He also advises clients on commercial agreements and Canada-U.S. cross-border business matters.

Peter Viitre is a partner at Sotos LLP whose practice focuses on franchise law. He advises franchise systems on franchise agreements, disclosure obligations and other legal and commercial issues affecting their businesses.

Nicole Perez is an associate at Sotos LLP who advises clients on franchise and commercial matters, including legal issues affecting franchisors and businesses operating within franchise systems.

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There are a variety of programs and grants offered by the federal and provincial governments that provide funding to subsidize the costs of trademark searches, analysis and filings. We have included information on three such programs below.

What government funding is available for trademark and IP protection in Canada?

What is Intellectual Property Ontario (“IPON”)?

The IPON program offers IP support to enterprises at various stages of growth. They provide clients with access to expert IP advice, services, and resources to better understand how to:

• maximize the value of IP;
• strengthen business capacity to grow;
• compete in the global market; and
• enhance research and commercialization outcomes.

The IPON program provides a variety of services: IP funding, IP benchmarking, IP education, IP coaching, and IP insurance.

IP Funding

IPON clients are eligible for funding to support IP protection and commercialization, with IPON covering up to 80% of expenses based on an approved scope of work. Clients are required to contribute at least 20% of the service costs and provide a plan to ensure future IP sustainability. Funding may be applied to IP-related agreements (such as non-disclosure agreements, licences) or contracts with high IP impact (master service agreements or partnership agreements). Certain expenses, such as administrative costs, litigation costs, taxes and subscriptions are not eligible for funding. IPON also does not cover costs for past work. Additionally, all IPON-funded services must be delivered by licensed IP lawyers or registered IP agents in Ontario. Clients may use their own providers or choose from IPON’s approved list of IP service providers.

IPON Benchmark

IPON offers a benchmarking tool that provides a comprehensive assessment of clients’ IP awareness by conducting a review of their IP strategy, assets and processes. These results help to tailor IP strategies and actions.

IP Education

Clients are able to participate in online workshops where IP experts facilitate class discussion and provide practical guidance. Clients are also provided with module-based e-learning courses on topics tailored to advance clients’ IP knowledge. A micro-credential is awarded to clients to showcase their learning milestones.

IP Coaching

IPON clients will have access to one-on-one coaching from IP coaches at no additional cost. These sessions will be tailored to clients’ specific needs and assist clients in developing and strengthening their IP position.

IP Events

IPON clients will have access to exclusive events geared towards networking, education, and growth. Events include keynote speeches, panels, and workshops delivered in collaboration with IPON experts.

IP Insurance

IPON clients that are eligible for funding will also receive IP insurance with a base coverage of $1 million. This insurance applies collectively to defense costs and enforcement actions.

Who is eligible for IPIN funding?

IPON’s Eligibility Criteria consist of a number of requirements.  Specifically, applicants must:

1. Be an Ontario-based small or medium sized enterprise (i.e. with fewer than 500 employees);
2. Be managed by a team that includes one or more Canadians;
3. Have a physical address in Ontario for substantive operations;
4. Operate in Ontario and intend to grow their business in Ontario long term;
5. Own IP or IP rights that it intends to commercialize or monetize in Ontario;
6. Operate in one of the following sectors:
   • health technology;
   • life sciences;
   • artificial intelligence;
   • vehicle technology;
   • mining technology;
   • agriculture;
   • food technology;
   • cleantech; and
   • advanced manufacturing (if the technology relates to any of the aforementioned sectors);
7. Demonstrate potential to realize societal or economic benefit to Ontario;
8. Demonstrate financial capacity to advance the protection and commercialization of IP and IP rights that may be supported by IPON Client Services;
9. Have an immediate IP need suited for IPON services and IP funding; and
10. Be a Canadian-controlled entity:
    • Private for-profit entity whose majority of the direct and indirect beneficial ownership is under the control of individual(s) resident of Canada and incorporated under the laws of Canada or any of its provinces or territories with a head office located in Canada; or
    • Public for-profit entity where over 20% of the direct and indirect ownership is under the control of individual(s) who are residents of Canada.

What is ElevateIP at Communitech?

ElevateIP is a federally-funded project designed to provide assistance to Canadian startups with regard to the development and protection of their intellectual property. The program is delivered through Communitech and Invest Ottawa in Ontario.

Who qualifies for ElevateIP funding?

ElevateIP’s Eligibility Criteria consists of certain requirements. Applicants must:

1. Be a Canadian-Controlled Private Corporation (“CCPC”);
2. Have fewer than 500 full time employees, globally;
3. Have exclusive rights to the IP; and
4. Be headquartered in Ontario, Manitoba or Saskatchewan.

Applicants may be required to submit additional information and attend an assessment meeting with an IP advisor to finalize the application process.

What is CanExport SMEs?

The CanExport SMEs program aims to support Canadian companies that produce goods and services or play a key role in exporting Canadian products to other international markets. The program funds projects that have the potential to significantly boost Canada’s economic growth and offers up to $50,000 to Canadian small and medium sized enterprises (“SMEs”) for international business development activities including expenses related to the protection of IP in target markets.

Who qualifies for CanExport SMEs?

To be eligible, your company must satisfy the following criteria:

1. Be for-profit;
2. Be an incorporated legal entity, limited liability partnership or cooperative in Canada;
3. Have an active Canada Revenue Agency business number;
4. Have between 3 and 500 full-time equivalent employees; and
5. Have between $300,000 and $100 million in annual revenue declared in Canada during its last complete tax reporting year (or during the last 12 months for monthly and quarterly filers).

Funding is provided in the form of cost-sharing between the recipient and CanExport. The applicant may apply for funding with a minimum budget of $20,000 and up to $100,000 per project.

The program funds up to 50% of eligible costs from $10,000 to $50,000 in funding per project. The applicant is responsible for the remaining 50% (in-kind contributions are not permitted).

With regard to IP, eligible expenses include:

• Filing a patent or industrial design application;
• Filing an application for the registration of a trademark or copyright; and
• IP professional services from a consultant and/or legal firm, which can include: the development of an international IP strategy, database search, drafting of formal IP documentation, and filing of IP documentation.

Brand owners should consider whether (1) they are eligible for these (or other) programs, and (2) whether it would be advantageous to their business to participate therein.

Sotos LLP provides Canadian and international businesses with a full range of IP-related legal and business services including trademark registration, IP protection and commercialization across a range of industries including technology, health, manufacturing, food service and hospitality, retail, consumer products and food and beverage. We can help businesses assess their IP needs, develop an IP strategy, protect trademarks and other IP rights, and determine whether government funding may be available to offset eligible IP costs.

If your business is considering trademark registration or other IP protection in Canada or internationally, contact our Intellectual Property team to discuss your options.

About the Authors

Anna Thompson-Amadei is a senior associate at Sotos LLP whose practice includes advising clients on trademark registration and other intellectual property protection. She helps businesses develop practical brand protection strategies that align with their growth and day-to-day business needs. Contact Anna at 416.572.7322 or athompson-amadei@sotos.ca.

Nicole Perez is an associate at Sotos LLP who advises clients on franchise and commercial matters. Contact Nicole at 416.977.3674 or nperez@sotos.ca.

The post Government Funding for Intellectual Property and Trademark Protection in Canada appeared first on Sotos LLP.

The award-winning series includes “Tariff Turmoil: U.S. tariffs and Canadian counter tariffs will have an impact on the franchise industry,” written by Sotos lawyers Peter Viitre, Jason Brisebois and Nicole Perez.

The National Magazine Awards recognize excellence in Canadian trade, professional and association publishing. The 2026 awards were judged by industry professionals who evaluated hundreds of submissions from across Canada.

Sotos LLP is credited as one of the writers of the Silver-winning Tariff Wars series alongside contributors from Foodservice and Hospitality Magazine.

Published in the May 2025 issue of Foodservice and Hospitality Magazine, Peter, Jason and Nicole’s article examines the potential impact of U.S. tariffs and Canadian counter-tariffs on franchisors and franchisees operating in Canada.

Tariffs can create challenges throughout a franchise system, particularly where businesses rely on cross-border supply chains, imported food products, equipment, materials or other goods. Increased costs can affect both franchisors and franchisees and may require businesses to reconsider sourcing, pricing, operational practices and contractual arrangements.

The article discusses several considerations for Canadian franchise systems responding to changing trade conditions, including:

• reviewing supply chains and considering alternative sourcing strategies;
• identifying operational efficiencies that may help offset increased costs;
• assessing whether franchise disclosure documents and franchise agreements adequately address tariff-related risks and changing economic conditions; and
• ensuring that marketing claims such as “Made in Canada” and “Product of Canada” comply with applicable Canadian laws and regulatory requirements.

For franchise systems operating across Canada and the United States, rapidly changing trade measures can have legal and commercial consequences that extend beyond the immediate cost of imported goods.

About the Authors

Peter Viitre advises franchisors and franchisees on franchise law and the commercial and regulatory issues affecting franchise systems. His practice includes franchise agreements, franchise disclosure and other matters involving the operation and growth of franchise businesses.

Jason Brisebois is a corporate and commercial lawyer whose practice includes franchise law, mergers and acquisitions and commercial transactions. He advises businesses on transactions and commercial arrangements across a range of industries.

Nicole Perez advises clients on franchise and commercial matters, including legal issues affecting franchisors, franchisees and businesses operating within franchise systems.

Read “Tariff Turmoil: U.S. tariffs and Canadian counter tariffs will have an impact on the franchise industry” in the May 2025 issue of Foodservice and Hospitality Magazine: https://digital-issue.foodserviceandhospitality.com/may-2025/page-26.

The post Sotos Franchise Lawyers Contribute to Award-Winning Tariff Wars Series appeared first on Sotos LLP.

On March 3, 2025, the Trump administration confirmed that the United States would proceed with imposing blanket tariffs on imports from Canada and Mexico, and increases to existing tariffs on China, effective March 4, 2025. These tariffs include a 25% tariff on all imports from Canada and Mexico, with the exception of Canadian energy resources and minerals, which face a reduced 10% tariff. The tariffs were initially planned to take effect on February 4, 2025, but were delayed by the Trump administration pursuant to ongoing negotiations with Canada and Mexico. The White House has also announced the imposition of 25% U.S. tariffs on all steel and aluminum imports with an expected effective date for imposition of March 12, 2025.

On March 4, 2025, the Government of Canada announced that, in response to U.S. tariffs, the Government of Canada would move forward with 25% tariffs on $155 billion worth of imported U.S. goods, beginning immediately with a first tranche covering $30 billion worth of goods. The scope of the Canadian counter tariffs will be increased to $155 billion if the current U.S. tariffs are maintained, and may also be increased if new U.S. tariffs are imposed. Beyond the federal government’s response, several Canadian provinces have implemented their own retaliatory measures. These include restricting government procurement opportunities for U.S. suppliers, terminating existing contracts and disqualifying future bids from U.S. companies, and removing American alcoholic products from provincially-controlled liquor stores. Ontario Premier Doug Ford has also indicated that he is considering imposing an export tax on Ontario-produced energy, and even halting energy and certain mineral resource exports altogether.

The implementation of U.S. tariffs and Canadian counter tariffs on imported goods will have widespread effects across various industries, including the franchise sector. Franchisors and franchisees must understand and prepare contingencies on how to navigate the legal and business consequences posed by the rising costs, disrupted supply chains and shifting market dynamics associated with these tariffs.

Supply Chain Analysis: Key Considerations for the Franchisor-Franchisee Relationship

Franchisees that depend on imported goods—whether for equipment, supplies, or inventory—may face substantial cost increases due to tariffs. For instance, tariffs on raw materials, such as steel and aluminum, as well as finished products, will likely drive up operational expenses and delay deliveries, potentially disrupting the system’s supply chain. This will impose increased costs on franchisees, which will necessitate a difficult decision between absorbing such costs, passing them on to customers, or a combination of both. Many franchise agreements also require the use of specific materials and equipment to maintain consistency throughout the system, which may limit (absent franchisor intervention) the ability of franchisees to easily adapt to changing economic circumstances.

Maintaining a strong franchisor-franchisee relationship is key in navigating these changing market conditions. Below are certain key considerations for franchisors in navigating this relationship:

• Initial Investment: Franchisors must consider whether they should make changes to their initial investment expectations and requirements for franchisees. If tariffs increase the cost of equipment, supplies, or inventory, franchisors should consider reviewing and revising the initial investment estimates to reflect these higher costs. Failure to do so may mislead potential franchisees about their expected expenses. Moreover, failing to account for such changes may be setting franchisees up for failure before they even begin operating.
• Ongoing Expenses and Unit Economics: Franchisors should evaluate how tariff-induced cost increases affect their unit economics, including per-location profitability, break-even points, and overall financial sustainability. Clearly presenting this data can help franchisees make informed investment decisions. If tariffs impact ongoing costs, such as supply procurement or vendor agreements, these changes should be disclosed. Franchisees should be made aware of potential cost fluctuations. Franchisors should assess franchisee costs on a market-by-market basis, and prepare to be flexible on procurement where necessary to ensure that franchisees’ unit level economics remain viable in light of this volatility.
• Supply Chain and Sourcing Restrictions: If a franchise system mandates specific suppliers affected by tariffs, these restrictions should be transparently disclosed. Franchisors may also explore whether allowing some flexibility in supplier selection can help mitigate disputes, and actively work with franchisees to assess whether domestic alternatives exist that will (while perhaps not entirely consistent with brand standards applicable in the U.S.) allow the franchisee to continue operating without further hardship than is necessary.
• Financial Performance Representations: Franchisors should monitor profit margins and other financial metrics due to tariff-related cost increases and assess whether tariff-related cost increases are a development that impacts financial performance representations. Providing outdated or overly optimistic projections could expose franchisors to legal claims and otherwise adversely impact the franchisor-franchisee relationship.

Consumer Price Sensitivity

Franchisors should also consider whether to authorize or encourage price increases for goods and services. However, price-sensitive consumers may reduce their spending or seek alternatives, particularly in highly competitive industries such as quick-service restaurants, retail, and hospitality. It is critical that franchisors consider balancing necessary price adjustments with consumer expectations in order to maintain brand reputation and profitability. In light of these challenges, franchisors should consider which obligations currently imposed on franchisees are crucial to maintaining brand standards, and which others may be more flexible.

Adapting to Tariffs for Growth and Expansion

Predictable costs and strong unit economics are the hallmarks of a successful franchise system. While tariffs imposed by the U.S. and Canada’s counter tariffs may create new cost pressures, they also present opportunities for Canadian brands to emphasize domestic production and sourcing, which can resonate with consumers and differentiate them in the market. Similarly, U.S. brands entering Canada may still find opportunities to expand, particularly when the favourable exchange rate helps offset tariff impacts, allowing cost-competitive pricing in the Canadian market. Franchisors and businesses that adapt their supply chains, pricing strategies, and brand positioning to these evolving dynamics can still find opportunities for growth and expansion despite the shifting trade landscape.

Opportunities and Competitive Shifts

While tariffs impose significant challenges for businesses of all stripes, they also provide opportunities for savvy and opportunistic businesses. For example, Canadian franchise systems with predominantly domestic supply chains may reap the benefits of changing consumer preferences towards Canadian-made products, while products previously bound for the U.S. may be sold domestically at the same or lower prices. Franchisors can also re-evaluate global sourcing strategies to mitigate tariff exposure.

To address ongoing challenges, franchisors should consider the following actions:

• Supply Chain Diversification: The tariffs should prompt franchisors to carefully re-evaluate suppliers and explore domestic alternatives where feasible.
• Negotiating Terms: Franchisors and franchisees should also work with suppliers to share or reduce tariff-related cost burdens.
• Efficiency Measures: Franchisors and franchisees should invest in technology or streamline operations to offset increased expenses.
• Franchise Disclosure and Agreement Revisions: It is critical that franchisors assess whether franchise disclosure documents and franchise agreements need adjustments to address unforeseen consequences arising from the tariffs.

Advertising Considerations: Made in Canada

While not the primary focus of this article, businesses should keep in mind that promoting products as “Made in Canada” or “Product of Canada”, or highlighting Canadian ownership, can be a valuable strategy for brands seeking to reduce the impact of tariffs between Canada and the United States. However, businesses must ensure that such claims comply with Canadian law, including the Competition Act, the Consumer Packaging and Labelling Act, and the Textile Labelling Act. These acts prohibit false or misleading representations, and restrict how and when such claims can be used. Businesses that choose to make “Made in Canada” or “Product of Canada” claims must ensure their claims meet the appropriate guidelines and thresholds. Our firm works closely with companies to develop compliant, strategic branding approaches that not only highlight Canadian origins, but also help navigate cross-border trade challenges.

Conclusion

U.S. tariffs present significant challenges for the franchise industry, with potential legal and financial implications for franchisors and franchisees alike. If you have any concerns as to how these tariffs will affect your system, and how to navigate these challenges, Sotos LLP can help. At Sotos LLP, we have acted for hundreds of clients in every aspect of the franchising process for over forty years. We have extensive knowledge of the regulatory issues that may arise from the introduction of tariffs and regularly assist with supply chain evaluations, contract revisions, and strategic planning to mitigate risks and seize opportunities in this complex regulatory environment. Our firm can assist in developing tailored strategies to mitigate the impact of tariffs, whether through supply chain restructuring, trade compliance planning, or leveraging available exemptions We can also assist in reviewing disclosure requirements in light of the tariffs.

Please contact Peter Viitre at 416.977.7754 or pviitre@sotos.ca, Jason Brisebois at 416.572.7323 or jbrisebois@sotos.ca, or Nicole Perez at 416.977.3674 or nperez@sotos.ca to see how we can help your franchised business adapt to ever-changing economic conditions.

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