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Navigating Franchise Disputes: Key Take-aways from Memphis Blues and 1010805 Alberta Ltd.
Melisa Delibasic, lawyer, KMB Law | July 04, 2024
Recent developments in franchise law are highlighted in two recent and notable cases that provide insights into the complexities of franchise agreements and the legal principles governing them. Together the cases address significant issues such as breach of contract, the application of constructive trusts, the duty of good faith, and the interpretation of franchise agreements, reflecting the evolving nature of franchise law in Canada.
Learn moreFranchise Law Primer: Ontario’s Resale Exemption
Ryan McCabe, associate, Osler, Hoskin & Harcourt LLP | April 12, 2024
This article considers the so-called "resale exemption" from the requirement in Ontario's Arthur Wishart Act (Franchise Disclosure) that the franchisor make disclosure to a prospective franchisee. After examining the leading judicial cases relating to the resale exemption, the author demonstrates that the scope of the exemption is construed narrowly.
Learn moreSaskatchewan’s Proposed Comprehensive Franchise Legislation
Madison Black, associate, Osler, Hoskin & Harcourt LLP | April 12, 2024
This article summarizes and reviews Saskatchewan's Bill 149 The Franchise Disclosure Act, which was introduced in the Legislative Assembly of Saskatchewan on November 9, 2023 and underwent its second reading on March 4, 2024. The author points out some notable features of the Bill in relation to the enacted franchise legislation in other provinces of Canada.
Learn moreStephanie Sugar, partner, McCarthy Tétrault | April 12, 2024
The threat of vicarious liability in tort and over a franchisee’s employees is one of the most important, and potentially costly, concerns for franchisors. The article discusses recent changes in the U.S. law that are impacting franchisors, and the potential impacts in Canada.
Learn moreThe Duty of Mitigation in Franchise Disputes
Idan Erez, partner, Hoffer Adler LLP | January 17, 2024
This article examines how the mitigation doctrine applies in franchise disputes. After identifying the rationales for mitigation, consideration is given to the circumstances under which franchisees and franchisors have a duty to mitigate, and circumstances where they do not. Both franchisees and franchisors should mitigate damages resulting from a breach of the franchise agreement; however, franchisees are not under a duty to mitigate their damages after rescission of the franchise agreement.
Learn moreTo Be or Not to be: Franchisee or Licensee?
Ashley Caldwell, lawyer, McKenzie Lake Lawyers | January 17, 2024
This article summarizes the outcome of plaintiff's and defendant's motions in the ongoing Ontario Superior Court of Justice case titled Tripsetter Inc. v 2161907 Alberta Ltd. 2023 ONSC. A central issue in this case is the question of whether Tripsetter was a franchisee of the defendant, and able to avail itself of remedies provided by the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3, or was merely a licensee.
Learn moreChatting it Up with ChatGPT: Franchise Law Insights from an AI Language Model
Adrienne Boudreau, ChatGPT | April 03, 2023
In this interview with ChatGPT, an AI language model trained by OpenAI, we explore the role of AI in Canadian franchise law. ChatGPT tells us what it knows about franchise law and practice. We also discuss the potential benefits and risks of using AI in legal practice, and how lawyers can best utilize ChatGPT. Finally, we get a glimpse of ChatGPT's sense of humour when it's asked to name this article.
Learn moreDispensing Justice: Spina v. Shoppers Drug Mart
Liisa Kaarid and Adil Abdulla | April 03, 2023
We've read and summarized all 864 paragraphs of the Spina v. Shoppers Drug Mart decision so that you don't have to! Learn the four key takeaways that every franchise lawyer should know from one of Canada's longest-running franchise class actions.
Learn moreDon't Wing It When It Comes to Disclosure... or a Trial: Case Comment on Jayasena
Jonathan Mesiano-Crookston, with thanks to Sara Fahmi for her assistance | April 03, 2023
In this trial decision, the Court considers whether asking a franchisee to sign a new franchise agreement amounts to a "grant" of a franchise, such that a franchisor cannot rely on the Wishart Act's disclosure exemption provisions. The Court also weighs in on the impact that unsubstantiated fraud, perjury, and collusion allegations, and the needless lengthening of trial time, will have on trial costs.
Learn moreThis trial decision trio of rescission cases provides new insights into the law around disclosure exemptions, the effect of having prospective franchisees sign a "generic" franchise agreement, addresses whether a franchisee can rescind a previously terminated franchise agreement, and discusses the law around franchisor's associates.
Learn moreManaging Franchise Defaults in the Post-COVID Era
Andrew MacIver | December 09, 2022
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.
Learn moreDerek Ronde and Danielle DiPardo, Cassels Brock & Blackwell LLP | July 15, 2022
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.
Learn moreJonathan Mesiano-Crookston, Goldman Hine LLP | July 15, 2022
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.
Learn moreThe Enforcement of Restrictive Covenants Against Non-Contracting Parties
Idan Erez, Hoffer Adler LLP | April 05, 2022
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.
Learn moreAccelerating Growth Through Managed Cloud Kitchens and Ghost Kitchens
Clark Harrop and David Shaw, Dale & Lessmann LLP | December 04, 2021
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.
Learn moreDetermining 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.
Learn moreForum Selection Clauses and Jurisdictional Challenges in British Columbia: The Case of Canstar
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.
Learn moreDerek Ronde, Cassels Brock & Blackwell LLP | June 21, 2021
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.
Learn moreMissing Notes to Financial Statements and Other Disclosure Deficiencies
George A. Wowk, Cassels Brock & Blackwell LLP | May 05, 2021
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.
Learn moreAndrew MacIver, Siskinds | March 23, 2021
The Supreme Court of Canada's two recent decisions in C.M. Callow Inc. and Wastech Services Ltd. revisited and clarified the principles of good faith contractual performance formulated in Bhasin. While it remains to be determined whether the common law duty of good faith is different from the franchise-specific duty of good faith and fair dealing, these general principles of contract law have important implications for parties to the franchise relationship.
Learn morePeter Snell, Gowling WLG, and Pam Vermeersch, Gowling WLG | March 23, 2021
The recent decision of the Alberta Court of Appeal in 1777453 Alberta Ltd. v. Got Mold Disaster Recovery Services Inc. provides important insight into the calculation of net loss damages upon the termination of the Franchisee-Franchisor relationship. This article provides a brief of the case and analysis of how the Court clarified damages from a net loss perspective, along with other issues.
Learn moreCourt Finds that Franchisee Took Commercially Reasonable Steps to Dissociate from Franchisor
Steven Goldman and Alana Spira | February 20, 2021
When the franchise relationship comes to an end, ensuring dissociation from the franchisor while continuing on with business can present challenges. In this case the Court dealt with a dispute as to whether there had been dissociation per the parties' agreement, and provides guidance on what constitutes commercially reasonable efforts.
Learn morePenalty Clauses and Liquidated Damages Provisions in Franchise Agreements
Adrienne Boudreau and Jason Brisebois, Sotos LLP | January 26, 2021
Penalty and liquidated damages clauses may seem like an attractive option in the contractual legal toolkit for franchise agreements. However, there are potential drawbacks and drafting considerations to keep in mind. This article provides an overview of these clauses, their benefits, and thoughts on their utility in the franchise context.
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