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Consumer & Retail Advisor

Tag Archives: franchisee

Ontario Court of Appeal Narrows the Availability of Franchise Rescission

Posted in Franchising, Retailing

On January 25, 2018, the Ontario Court of Appeal (the “OCA”) released its much-anticipated decision in Raibex Canada Ltd. v. ASWR Franchising Corp. In a business-friendly decision overturning the lower court’s decision, the OCA narrowed the availability of rescission for franchisees, reinforcing the importance of recognizing the distinction between “no disclosure” and “imperfect disclosure”, and further re-focusing the test for the availability of rescission under s. 6(2) of the Arthur Wishart Act (Franchise Disclosure) (the “Act”) to an analysis of whether the franchisee was effectively deprived of the opportunity to make an informed investment decision.

 There are four key takeaways Continue Reading

Legal Risk Management in Franchise System Change

Posted in Franchising

As a matter of competitive necessity, franchisors must continually evolve and adapt their products, services and internal operations. However, given the risk of litigation and indeed class actions from franchisees and dealers who may be negatively affected, franchise system change must be managed with special care. In a recent article published in the Ontario Bar Association’s Focus on Franchising, members of McCarthy Tétrault’s Franchise & Distribution Group have reviewed the legal trends that emerge from the franchise system change case law in Canada and distill several risk management strategies. The authors reach three key conclusions:

a.     Every proposed policy … Continue Reading

Franchise Lessons to Be Learned From the Shoppers Drug Mart Certification Decision

Posted in Corporate Matters, Franchising

The Shoppers Drug Mart franchisees recently took another step forward in their class action lawsuit. Building on his earlier decision discussed here, Justice Perell for the Ontario Superior Court of Justice (ONSC) certified a number of elements of the plaintiffs’ action as a class proceeding. In this article, we have focussed on the three aspects of the decision that, in our view, are most significant to franchise and distribution systems.… Continue Reading

Ontario Court of Appeal Considers Scope of Franchisor’s Duty to Disclose Outside Mandatory Disclosure Context

Posted in Corporate Matters, Franchising, Real Estate

In an important new decision for franchisors, 3574423 Canada Inc. v. Baton Rouge Restaurants Inc. (Baton Rouge), the Ontario Court of Appeal (ONCA) recently considered the scope of informational disclosure a franchisor is required to provide to one of its franchisees outside the context of statutory disclosure obligations. In Baton Rouge, the ONCA considered the scope of a franchisor’s duty of good faith when supplying an existing franchisee with information concerning a new location.

This appeal was from a 2012 trial decision of Justice Brown, which we previously discussed here. The trial decision clarified a number of issues … Continue Reading