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Category Archives: Franchising

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Now Available! First edition of Cross-Border: A Retailer’s Guide To Doing Business in Canada

Posted in Canadian Market Entry, Cross-Border Transactions, Franchising, Retailing

Growing your retail business, or looking to set up shop in Canada? Check out Cross-Border: A Retailer’s Guide to Doing Business in Canada available now. This comprehensive resource offers an overview of the legal aspects of establishing and operating a retail business in Canada. It draws from the top-tier expertise developed by McCarthy Tétrault’s market-leading Retail and Consumer Markets Group and their unparalleled experience in the Canadian Consumer Products, Food, Beverage & Agribusiness, Franchise & Distribution, Hospitality and Retail sectors.

Download a copy here.… Continue Reading

Ontario Court of Appeal Dismisses Dealers’ Appeal Related to GM Restructuring

Posted in Class Action, Distribution, Franchising

On July 4, 2017, the Ontario Court of Appeal dismissed the appeal by the Representative Dealer in a franchise class action commenced against General Motors Canada Ltd. (“GM”) relating to the restructuring of its dealer network in 2009.  The Court focused on the narrow issue of whether the release and related wind down agreement which members of the dealer class signed was enforceable, thereby barring the class action.  Since the Court found that the release was indeed enforceable, the claim was barred and the Court had no need to consider the other issues raised by the dealers on Continue Reading

Ontario Court of Appeal Confirms Strict Approach to Franchise Disclosure

Posted in Franchising

A recent decision of the Ontario Court of Appeal confirms the strict nature of the disclosure requirements under the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 (the “Act”).

In Mendoza v. Active Tire & Auto Inc., 2017 ONCA 471, the Court of Appeal made the following five key findings:

1. First, the Court reviewed the case law on the test for whether a disclosure document is fatally deficient under the Act, thus entitling the franchisee to rescind the franchise agreement within two years of the date that the franchise agreement is signed. The Court confirmed that … Continue Reading

Retail Sector in the Crosshairs of the Changing Workplaces Review Final Report: 10 Ways Retailers Could Be Impacted

Posted in Employment and HR, Franchising, Retailing

Premised on the theory that vulnerable workers and precarious employment exists in Ontario and needs to be addressed, the Final Report of the Changing Workplaces Review contains 173 recommendations, many of which focus specifically on the retail sector.  Below we identify ten recommendations that are likely to have a significant impact on retailers.

As previously mentioned on this blog, the Government of Ontario has now released the Final Report of the Changing Workplaces Review, which recommends a number of changes to Ontario’s Employment Standards Act, 2000 (“ESA”) and Labour Relations Act, 1995 (“LRA”). The Final Report specifically identifies the … Continue Reading

Changing Workplaces Review – Final Report: Potential Impact on Franchises

Posted in Employment and HR, Franchising

The Final Report has just been released for the Changing Workplaces Review, containing recommendations for legislative changes to Ontario’s Employment Standards Act, 2000 and Labour Relations Act, 1995.  A number of changes are either specific to franchises or may have an impact depending on the sector of the franchise and the way the franchise operates. Here we have summarized recommendations that are most relevant franchisors.

Recommendations concerning the Ontario Labour Relations Act, 1995 (“LRA”):

  1. Broader Based Bargaining: The Final Report recommends that the Ontario Labour Relations Board be given certain powers to implement a model of centralized bargaining,
Continue Reading

BC Court Enforces Franchise Termination and Release Agreement

Posted in Franchising, Litigation

Overview

In the recent decision Dairy Queen Canada, Inc. v. M.Y. Sundae Inc., 2017 BCSC 358, the Supreme Court of British Columbia upheld a Mutual Cancellation and Release agreement in the context of a franchisor-franchisee relationship. The decision confirms that, absent evidence of duress or unconscionability, a franchisor is permitted to take advantage of a superior bargaining position, and obtain an enforceable release when a franchisee is in default.  The decision only considered common law principles as opposed to franchise legislation.  The Court also awarded damages for the tort of passing off against a franchisee who refused to … Continue Reading

BC Court of Appeal: “Immediate” Termination Rights in Dealer Agreements Must be Exercised Promptly

Posted in Case Comment, Distribution, Franchising, Litigation

In the recent decision of Cellular Baby Cell Phones Accessories Specialist Ltd. v. Fido Solutions Inc., 2017 BCCA 50 the BC Court of Appeal held that the long delay in the exercise of a supplier’s contractual right to terminate a dealership agreement rendered the termination improper.  The court also held that a dealer’s obligation to mitigate its damages upon termination was met, even though the dealer declined to sell the dealership to a third party.

In this case, the supplier terminated the dealership agreement on the basis that the dealer had failed to meet quarterly sales quotas on three … Continue Reading

Just Around the Corner! B.C. Franchises Legislation in Force February 1, 2017

Posted in Franchising

As we reported here, British Columbia’s new Franchises Act, SBC 2015, c 35 (the “Act”) and accompanying Franchises Regulation (the “Regulation”) will come into force effective February 1, 2017. From this date, franchisors granting, renewing or extending franchises in B.C. will be subject to the new legislation. Franchisors should also be aware that some provisions of the Act, such as the right to associate, apply to franchise agreements entered into prior to February 1, 2017.

The most important change for franchisors operating in B.C. will be the comprehensive disclosure regime articulated in s. 5 … Continue Reading

Impending BC Franchise Legislation: Are You Ready?

Posted in Franchising

Effective February 1, 2017 BC will become the 6th Canadian province to enact franchise legislation.

On October 18, 2016, McCarthy Tétrault hosted a seminar that featured highlights of the new BC Franchises Act and Franchises Regulation and issues arising therefrom, including:

  • An overview of the framework of the BC Franchises Act and Franchises Regulation;
  • practice points for preparing compliant national franchise disclosure documents; and
  • other important legal developments to be mindful of, including restrictions on obtaining releases of claims under the act and jurisdictional issues

The presentation can be accessed here.

Feel free to direct any questions … Continue Reading

It’s Official! BC Releases Long Awaited BC Franchises Act Regulation!

Posted in Franchising, Legislation

Further to our previous posts, available here and here, the much anticipated BC Franchises Regulation (the “Regulation”) was released today, and it was proclaimed that the Franchises Act, SBC 2015, c 35 will come into force effective February 1, 2017. The Regulation and order of the Lieutenant Governor in Council can be accessed here. BC is now the sixth province to enact uniform franchise legislation.

The Regulations specify the information to be included in a disclosure document, including information related to: risk warnings, financial statements, and other prescribed information related to the franchisor and the franchise. By … Continue Reading

Not So Fast! Ontario Court Finds Franchise Grant “Premature”

Posted in Franchising, Litigation

In the recent decision of Raibex Canada Ltd. v. ASWR Franchising Corp., the Ontario Superior Court of Justice allowed a franchisee to rescind its franchise agreement on the basis that it signed the agreement at a time when critical information regarding the costs to develop the franchise and leasing obligations had not yet come into existence.  As a result, the Court found that the franchise grant was “premature” and the disclosure document provided to the franchisee deficient.

At issue in this case, was the franchisor’s failure to provide details relating to a sublease and franchise development costs, … Continue Reading

Alberta Extends Mature Franchisor Exemption to 2021

Posted in Consumer Protection, Franchising, Legislation, Retailing

The Alberta government has recently decided to extend its Mature Franchisor Exemption under the Franchises Act until its next review in 2021. Under the Franchises Act Exemption Regulation, large franchisors meeting certain financial thresholds and holding a high level of operational experience are exempt from including financial statements as part of their Franchise Disclosure Document to prospective franchisees. In extending this exemption, the Alberta government has kept its legislation consistent with other provincial franchise legislation. Going forward, this move should help Alberta to remain attractive to franchise system investors.… Continue Reading

Post Dunkin in Quebec: What We Have Seen

Posted in Franchising

Franchisors should take note of potential novel allegations being brought against them since the Quebec Court of Appeal’s ruling in Dunkin’ Brands Canada Ltd. v. Bertico Inc., 2015 QCCA 624 (“Dunkin”)[1].

Dunkin reiterated the law’s willingness to read certain obligations into franchise agreements based on the duty of good faith and obligations which flow from the general nature of franchise agreements. Franchisors and franchisees alike have been left to speculate where the limits of their respective obligations and rights lie in the face of a legal landscape in flux.

Since Dunkin, two actions of note … Continue Reading

Happy FranCanada Day – Electronic Delivery of FDD’s in Ontario on July 1st

Posted in Franchising, Legislation

Further to our update in April Ontario has approved the amended regulations to the Arthur Wishart Act (Franchise Disclosure), 2000 to permit electronic delivery of franchise disclosure documents (“FDD’s”).  Regulation 581/00 comes into effect July 1, 2016.

Effective July 1, 2016, franchisors will now be able to deliver FDD’s electronically or by courier, in addition to the previously approved methods of in person or registered mail delivery. The complete changes may be viewed here.

With these amendments, Ontario franchise legislation has received a mini-modernization-makeover.

The new legislation provides that electronically delivered FDD’s must meet the following conditions:

  • be in
Continue Reading

Ontario Court of Appeal Recognizes Potential Liability of the Corporate Parent of a Franchisor Under the Duty of Good Faith

Posted in Case Comment, Distribution, Franchising

On McCarthy Tétrault LLP’s Canadian Appeals Monitor blog, Adam Ship and Sarah Ahsan recently published a helpful discussion of the Ontario Court of Appeal’s decision in Addison Chevrolet Buick GMC Limited et al. v. General Motors of Canada Limited et al., which will be of interest to readers of the Consumer & Retail Advisor blog. This decision potentially opens the door for a franchisor’s parent company to be liable to a franchisee of its subsidiary for breach of the duty of good faith.… Continue Reading

Proposed Amendments to Franchise Legislation in Alberta and Ontario

Posted in Franchising

Ontario is proposing to amend Regulation 581/00 under the Arthur Wishart Act (Franchise Disclosure, 2000) to permit franchisors to electronically deliver disclosure documentation (“FDD”) to prospective franchisees as well as deliver FDD by courier. See the proposed amendments here.

The draft legislation provides that electronically delivered FDD’s must be in a form that enables the recipient to view, store, retrieve and print it, contains no links to external content and has an index for each separate electronic file that describes the subject matter therein. Electronic delivery of FDD’s will only be effective were the franchisor receives an electronic … Continue Reading

Cook or Get Out of the Kitchen: Legitimate Interest Required to Enforce a Restrictive Covenant

Posted in Competition, Franchising, Litigation

On McCarthy Tétrault LLP’s Canadian Appeals Monitor blog, Shanique Lake recently published a helpful discussion of the Ontario Court of Appeal’s decision in MEDIchair LP v DME Medeqip Inc, which will be of interest to readers of the Consumer & Retail Advisor. This decision has important implications for all franchisors and franchisees in respect of enforcement of restrictive covenants or non-competition clauses in franchise agreements.… Continue Reading

Dunkin’ Donuts: The Supreme Court of Canada puts an end to the saga

Posted in Franchising, Litigation

On March 17, 2016, the Supreme Court of Canada (“SCC”) dismissed the Dunkin’ Brands Canada Ltd.’s application for leave to appeal from the judgment rendered by the Québec Court of Appeal on April 15, 2015.

By dismissing the application for leave, the SCC determined that it would not review the Québec Court of Appeal decision which, notably, ruled that the obligations to enhance and protect the brand are implicit to franchise agreements. A more detailed analysis of this decision is available in our previous publication.

As is customary, the SCC did not provide its grounds for dismissing the application … Continue Reading

Takeaways – McCarthy Tétrault’s 6th Annual Consumer Products and Retail Summit

Posted in Branding, Competition, Distribution, Employment and HR, Events, Franchising, Real Estate, Retailing, Shopping Centres

McCarthy Tetrault’s 6th Annual Consumer Products and Retail Summit was held on February 25, 2016. Here are our key takeaways from the Summit, including practical tips from each of our topics:

Trends and Lessons Learned from Recent Retail Restructurings
Katherine Forbes and Mirella Pisciuneri, Richter Advisory Group

  • E-commerce is here to stay and is key to success, but only as part of a strategy combined with ‘bricks & mortar’ to create a customer experience
  • Vertical integration and comprehensive merchandise planning are critical for reducing costs and improving profit margins
  • Make the most of available consumer profile information, but be mindful
Continue Reading

Franchise Agreements: Beware of Misrepresentations

Posted in Franchising, Litigation

On January 18, 2016, the Quebec Court of Appeal rendered an interesting judgment as to the consequences of a contract which precluded future claims, by a franchisee against its franchisor on the basis of false representations.

In Presse Café Franchise Restaurants inc. c. 9192-6287 Québec Inc. et Pierre Demarais, Presse Café Franchise Restaurants Inc. (“Presse Café“), appealed the judgment requiring  it to indemnify Mr. Pierre Desmarais and 9192-6287 Québec Inc. (together the “Franchisee”), a corporation formed by Mr. Desmarais for purposes of operating a Presse Café premium franchise.

Presse Café operates a network of franchises … Continue Reading

Ontario Court of Appeal Dismisses Pet Valu Class Action, Clarifies the Scope of the Duty of Good Faith and Fair Dealing and Calls for Greater Judicial Restraint

Posted in Class Action, Consumer Protection, Franchising, Litigation

The recent decision of the Ontario Court of Appeal in 1250264 Ontario Inc. v. Pet Valu Canada Inc., 2016 ONCA 24 clarifies and narrows the scope of the duty of good faith and fair dealing imposed on franchisors under section 3 of the Arthur Wishart Act (Franchise Disclosure) (“AWA”) and expressly cautions against zealous judicial intervention in the framing and amendment of common issues in class action proceedings.

Read more in the original post by our colleagues at Canadian Appeals Monitor, McCarthy Tétrault’s blog focusing on information and commentary on upcoming and recent Appeal Court decisions.… Continue Reading

Ontario Court Grants Injunction to Protect Franchisor from Rogue Franchisees

Posted in Consumer Protection, Franchising, Litigation, Retailing

In Home Instead Inc. v. 244674 Ontario Inc. et al. (“Home Instead”), the Ontario Superior Court of Justice (the “Court”) considered the granting of an injunction against the franchisees, 244674 Ontario Inc. et al. (“244”) leading to the termination of their businesses where the goodwill and reputation of Home Instead (the “Franchisor”) was at stake. The two principles Mr. Weinert and Ms. Reid were allegedly operating their two separate franchises in common ownership in breach of the terms of their respective franchise agreements. Their franchise agreements did not permit the operation of … Continue Reading

Ontario Court Denies Leave to Appeal for Addison Chevrolet

Posted in Consumer Protection, Franchising, Retailing

On October 30, 2015, the Divisional Court dismissed a motion brought by the Plaintiff franchisees for leave to appeal the decision of the Ontario Superior Court of Justice in Addison Chevrolet Buick GMC Ltd. v. General Motors of Canada Ltd. In that decision, General Motors of Canada successfully struck four paragraphs of the statement of claim as it related to the duty of good faith. A summary of that decision can be found in the following link:

https://www.consumerretailadvisor.com/2015/08/not-everyone-is-a-party-some-comfort-for-foreign-franchisors/… Continue Reading

Ontario Court Allows Franchisor to Rely on Buy/Sell Exemption to Disclosure and Enforces Restrictive Covenant

Posted in Franchising, Transactions

In MEDIchair LP v. DME Medequip Inc. (“MEDIchair”), the Ontario Superior Court of Justice (the “Court”) considered whether a restrictive covenant contained in a franchise agreement is enforceable by a franchisor, MEDIchair LP (the “Franchisor”) against its corporate franchisee, 2169252 Ontario Inc. (“216”) and its two principals, Allison Rolph and Ron Seiderer (collectively, the “Respondents”).The Court also considered circumstances where a franchisor may rely on the exemption set forth in Section 5(7)(a)(iv) of the Arthur Wishart Act (Franchise Disclosure), 2000 (the “Act”) to avoid the disclosure obligations … Continue Reading