Introduction
In Sirianni et. al. v. Country Style Food Services Inc. et. al., 2012 ONSC 881 (“Sirianni”), the Ontario Superior Court discussed the applicability of the disclosure requirements of Arthur Wishart Act (Franchise Disclosure), 2000 (the “Wishart Act”) to a franchise relationship that continued despite expiry of the franchise agreement. In a decision which favours the franchisee, the Court re-emphasizes to the franchising community the protective purpose of the Wishart Act in the franchise renewal context.
Significance
Sirianni is significant for the following reasons:
- it describes under what conditions a franchise agreement may be renewed or extended, emphasizing the fact that any document executed by the franchisee may be construed as a franchise agreement;
- it reiterates the importance of providing full disclosure when the renewal exemption (subsection 5(7)(f) of the Wishart Act) does not apply because there has been a material change since the franchise agreement was entered into or last renewed;
- it emphasizes that failure to disclose a single material fact can and will amount to “no disclosure document” thereby allowing the franchisee to rescind pursuant to subsection 6(2) of the Wishart Act within two years after entering into (or in this case renewing) the franchise agreement; and
- it confirms that significant damages will be awarded where the duty of fair dealing in 3 of the Wishart Act is breached.