Articles 2020

What happens between parties to a franchise agreement when their relationship breaks down, but the franchisee continues to operate as a de facto franchisee?

The COVID-19 pandemic has caused many changes for us all. Such changes and challenges have impacted franchising generally. At times, these new business realities have resulted in franchisees defaulting on their obligations under their franchise agreements. What is the best way to respond to these defaults? This article considers strategies for managing defaults in franchise relationships in our new, post-COVID world.

Restrictive covenants can be an essential feature of a franchise agreement, but how will they be enforced? Recent developments in the law have cast some confusion and inconsistency on the interpretation, scope, and enforceability of these clauses, including the test for obtaining injunctions. In this article the authors review recent decisions, and weigh in on the debate.

Section 11 of the Wishart Act is a protective provision preventing any waiver or release of rights. The Courts have interpreted the section strictly, presenting challenges in practice around ensuring enforceability of contractual releases. This article discusses the legal developments interpreting s. 11 and recent decisions clarifying its scope.

Restrictive covenants, such as non-compete and non-solicitation clauses, are a common feature of franchise agreements - but how far does the scope of enforcement extend? Despite tenets of privity, Courts have demonstrated a willingness to bind non-contracting third parties in certain franchising contexts. This article discusses the evolution of judicial consideration, and examines a recent B.C. Court of Appeal decision providing welcomed guidance on these issues.

The phenomenon of ghost kitchens has increasingly sparked the interest of many in the restaurant industry. With Covid-19 especially, delivery represents a large and growing proportion of the foodservice industry. This article explores the issues, opportunities, and challenges of ghost kitchens for franchisors amidst a rapidly changing environment.

Determining the scope of "all material facts" that must be disclosed to franchisees is a key part of the continuing evolution of franchise law in Canada. This article provides important insights on two recent cases dealing with location-specific disclosure requirements, and sets out a helpful overview of how the law has developed in this area.

A recent British Columbia Supreme Court decision provided the Court the first opportunity to interpret and apply certain sections of the relatively recently enacted BC Franchises Act. This article details the analysis and precedential value of the decision for the scope and application of s. 12 of the BC Act, as well as outlining the Court's in depth consideration of defining the franchise relationship.

Can the franchisor-franchisee relationship create a conspiracy? In its decision Pearce v. 4 Pillars Consulting Group Inc., the B.C. Court of Appeal upheld the lower court's decision to certify a number of claims, including civil conspiracy, in a class proceeding against both franchisee and franchisor defendants. This article highlights the outcome of the decision and considers potential consequences and considerations for franchise systems.

A recent Ontario case considered the test for determining whether deficiencies in a disclosure document are so material so as to amount to no disclosure at all, thereby permitting rescission within two years under section 6(2) of Ontario's Arthur Wishart Act. The decision notes that the test, which considers whether the deficiencies impair the ability of a franchisee to make an informed decision, is an objective one, but which must account for the particular facts of each case.