Now and Then: An Overview of the Development of Location-Specific Disclosure Requirements, Where We Are and Where We Are Going Following Freshly Squeezed and Yogurtworld

Introduction

The “Freshly Squeezed” decision (2611707 Ontario Inc., et al v. Freshly Squeezed Franchise Juice Corporation, et al., 2021 ONSC 2323) and the “Yogurtworld” decision (2364562 Ontario Ltd. v Yogurtworld Enterprises Inc., 2021 ONSC 5112) are the most recent decisions released by the Ontario Superior Court that consider the scope of “all material facts” and location-specific disclosure requirements in the context of franchise disclosure under the Arthur Wishart Act (Franchise Disclosure), 2000 (AWA). Freshly Squeezed quickly generated some debate about whether franchisors must contend with a new standard of disclosure. The scope of the obligation to disclose all material facts has been a regularly debated issue before our courts since it was originally considered in 1490664 Ontario Ltd v Dig This Garden Retailers Ltd, in 2005.[1]  It is an understandably popular topic, given that the failure to disclose all material facts could give rise to the two-year rescission remedy under the AWA, whereby, if successful, a franchise agreement can be unraveled and the franchisor is obliged to, among other things, refund all monies received from the franchisee and compensate the franchisee for any losses incurred in acquiring, setting up and operating the franchise.

In this article, we explore the principal cases from Ontario courts that have considered the issue of location-specific disclosure, meaning disclosure of information that is unique to the specific franchised location to be acquired by a specific franchisee. The article culminates with an examination of how these two recent decisions in particular may affect the requirement to disclose location-specific information going forward.