HUMAN RIGHTS TRIBUNAL OF ONTARIO
B E T W E E N:
Andrew Sprague
Applicant
-and-
MBEC Communications Inc. and its wholly owned subsidiary MBEC Communications L.P. carrying on business as The UPS Store (Canada)
Respondents
DECISION
Adjudicator: Josée Bouchard
Indexed as: Sprague v. MBEC Communications Inc.
APPEARANCES
Andrew Sprague, Applicant
Self-represented
MBEC Communications Inc. and its wholly owned subsidiary MBEC Communications LP carrying on business as the UPS Store (Canada), Respondents
Ronald Boratto, Counsel
INTRODUCTION
1This Application arises out of an incident that occurred on September 25, 2014 at The UPS Store on Toronto Street in Toronto (“the Store”). The facts are not in dispute and the parties agree that the owner of the Store (“the Owner”) discriminated against the applicant in the provision of services because of his disability.
2The respondent MBEC Communications L.P. is the master franchisor for The UPS Store in Canada and operates under the name The UPS Store. The respondent MBEC Communications Inc. is the parent company that owns MBEC Communications L.P. For the purpose of this proceeding, the parties referred to and treated MBEC Communications L.P. and MBEC Communications Inc. interchangeably.
3The main issue for the Tribunal is whether the respondents may be deemed liable under s.46.3(1) of the Human Rights Code, R.S.O. 1990, c. H.19, as amended (the “Code”) for the actions of the Owner.
background
4The applicant filed the Application on September 24, 2015 alleging discrimination with respect to the provision of goods and services because of disability contrary to section 34 of the Code.
5The applicant testified and called no other witnesses. Steve Moorman, the respondents’ Senior Vice President of Operations and Senior Vice President Franchise Operations, and Ronald Boratto, the respondents’ Executive Vice President and Corporate Counsel, testified for the respondents. The Tribunal also considered written submissions including the applicant’s legal arguments presented in his hearing brief filed on April 25, 2016, the respondents’ closing arguments filed on June 8, 2016 and the applicant’s written closing submissions filed on July 19, 2016.
6On August 12, 2016, I issued a Case Assessment Direction (“CAD”) providing an opportunity for the parties to file written submissions on the relevance of Elgin v. 2112412 Ontario Incorporated o/a Bagel World Thornhill, 2016 HRTO 791 (“Elgin”), a decision released two days after the hearing date. Submissions from both parties were provided and considered.
Jurisdiction
7Before hearing the evidence, I heard oral submissions on the issue of whether the respondents are federally regulated and outside the Tribunal’s jurisdiction. Mr. Boratto maintained that the respondents are not federally regulated. He described the respondents as a large chain of print, copy and business centres. Among the many services offered by the respondents are copies and document finishing, office supplies, computer rentals and small business services. He clarified that the respondents are distinct from the United Parcel Service (“UPS”), a package shipping company that provides deliveries across borders. See Escudero v. United Parcel Service, 2009 HRTO 811 and Peters v. United Parcel Services Canada Ltd., 2015 HRTO 926. I am satisfied that the respondents are not involved in transportation works and undertakings that extend beyond the limits of a province and, as such, are not federally regulated.
The Evidence
September 25, 2014 Incident and the Respondents’ Response
8The following summarizes the agreed statement of facts between the parties:
On September 25, 2014, the applicant, accompanied by National Service Dog Flicka, his certified service dog, attended at the Store to ship a package. The applicant’s dog was wearing a service dog working vest that clearly identified her as a service dog. She has been bred and trained by National Service Dogs Training Centre Inc. (“NSD”), a registered Canadian charity accredited by Assistance Dogs International, to assist the applicant with the management of a medical condition.
The Owner told the applicant to leave because his dog was not welcome in the Store. The applicant offered to show the Owner his certified service dog’s certification documentation but the Owner did not want to see it. He again told the applicant to leave the Store.
The applicant asked the Owner for his name, but the Owner replied quickly and refused to repeat his name. He told the applicant to leave the Store. The other gentleman sitting behind the counter also refused to give his name.
The applicant began to walk away but decided that it would be best to go back and assert his legal right to have his certified service dog with him while he was trying to seek services from the Store. This time he entered into the Store, turned on the audio recording on his smartphone and held it out in plain sight.
On his second attempt to enter the Store, he was permitted to speak with the gentleman behind the counter. The Owner again refused to tell him his name or whether he owned the Store.
The front of the Store had, at the time of the incident, a “no pets allowed signage”. The Owner told the applicant that “his dog is a dog”. When the applicant stated again that the dog is a certified service dog, the Owner replied that “a dog is a dog”.
The Owner asked the applicant “What are you using him for?” and indicated that he does not understand the law.
The applicant took NSD Flicka’s certification documentation out of her working vest, offered it to the Owner and suggested that he make a photocopy. The Owner declined.
The applicant chose to ship the package with another international delivery company on October 8, 2014.
9The respondents took numerous steps to address the situation and the following evidence is uncontested:
On September 25, 2014, following the incident, the applicant contacted the respondents to complain.
On September 26, 2014, the respondents published an article entitled “Legal Rights for People who Use Service Animals” in their Weekend Update notifying franchisees across the country of the legal rights of persons who use service animals. The article provides:
MBEC has maintained a long standing policy in support of providing a welcoming environment for all customers, including those who rely on a service animal for their support. This policy was extended more than 20 years ago to include service animals required to provide support to the franchisee working in a store […] At no time should a customer visiting the store in the company of their service animal ever be denied equal access.
On September 30, 2014, the respondents’ three most senior executives, President David Druker, Mr. Moorman and Mr. Boratto, arranged a call with the applicant to review the matter and express concern over the incident. They explained to the applicant that the respondents do not operate the Store but took his complaint seriously. Mr. Druker apologized on behalf of the respondents and committed to have the matter investigated. The respondents admit that the Owner’s action were aberrant and not to be tolerated.
The following day, Mr. Druker, Mr. Moorman and Mr. Boratto, visited the Store in person and met with the Owner. Upon arriving at the Store, Mr. Druker noticed and immediately removed the “no pets allowed” signage from the premises. In his view this was a breach of the respondents’ policy.
Mr. Druker, Mr. Moorman and Mr. Boratto reviewed the surveillance footage of the incident and gave the Owner an opportunity to explain his actions. The Owner appeared reluctant to take full responsibility and lacked understanding of his legal obligations. The surveillance footage showed the incident and it appeared that, although the Owner eventually provided services to the applicant, his actions were not in keeping with the respondents’ policies and guidelines. The respondents advised the Owner that they would default him pursuant to the Franchise Agreement between the respondents and the Store (the “Franchise Agreement”), that an apology to the applicant was in order and that he should obtain independent legal advice.
Mr. Boratto, in his capacity as Executive Vice President and Corporate Counsel, issued a default letter (“Default Letter”), dated October 1, 2014, to the Owner warning him that he was in breach of his legal obligations and his behaviour had to stop. The Default Letter reiterated the applicant’s legal right to have his service dog with him, and indicated that,
[…] this matter has resulted in negative media and public coverage and has caused our entire network serious embarrassment and ill will […] It has resulted in the need for us to prepare a legal response to the complaint and to expend resources to defend the matter at no small cost […]
David Druker, Steve Moorman and I had the opportunity to meet with you earlier today to discuss this matter and have also had the opportunity to speak with the complainant. As we discussed, we strongly recommend that you take every step to contact the complainant and apologize for the entire incident. If this matter does indeed proceed to a full tribunal hearing before the Human Rights Commission as contemplated, the damage to our brand and the cost in bad publicity time and expense will be significant to you and to us [...]
Section 13.1(j) of your franchise agreement reads as follows:
… if Franchisee engages in any conduct that, in the reasonable opinion of MBE Canada, reflects unfavourably upon or is detrimental or harmful to the Franchise, to the TUPSS Marks, to the good name, goodwill or reputation of MBE Canada, MBE US or to the business, reputation or goodwill of its franchisees, and Franchisee fails to cease such conduct, or take such other steps as may reasonably be required by MBE Canada or MBE US to correct such conduct…
Clearly the actions of September 25, 2014 have given rise to such results and have put you in default of this provision of your Franchise Agreement.[…] Future breaches of this nature could result in the immediate termination of your Franchise Agreement.
The Owner obtained independent legal advice and the respondents worked with the Owner’s counsel to ensure that he would properly apologize. On October 7, 2014, the Owner apologized to the applicant in writing and on October 10, 2014 in person. The applicant accepted the apologies as he believed they were sincere and genuine.
The respondents testified that new franchisees participate in a five week training program before they open their own stores. In response to the applicant’s complaint, the respondents modified the new franchisee training program to provide new franchisees information about their obligations under the Accessibility for Ontarians with Disabilities Act and similar legislation across the country. The respondents also added the topic of accessibility and human rights to the final examination that new franchisees must pass before they open their own stores.
The incident was also discussed on October 7, 2014 at the “area franchisee across Canada conference call” that includes all area franchisees and area support teams. A request was made to all area franchisees and area supervisors and support teams to stress compliance with the requirements.
The responses from the area franchisees and support teams were uniformly the same: the franchisees were well aware of their obligations to accommodate persons with service animals and were surprised that the issue was even raised.
The respondents also improved the wording of their operating manual to clarify the legal rights of persons who use service animals.
The Respondents’ Structure and Testimony Regarding the Relationship with Franchisees
10The following summarizes Mr. Moorman and Mr. Boratto’s testimonies about the structure of the respondents and their relationship with franchisees:
The respondents are master licensees for Canada for The UPS Store brand and there are in excess of 355 franchisees operating as The UPS Store in Canada, predominantly located in Ontario and British Columbia. The respondents’ home office is in Oakville and includes three staff members. The respondents and the Store entered into their Franchise Agreement on March 8, 2010.
The protection of the brand and franchise system is of utmost importance to the respondents and the main purpose of the Franchise Agreement is to protect the brand and system. The Franchise Agreement allows the respondents to maintain a reasonable level of control to protect the brand and franchise system while allowing the franchisee to operate his or her own retail operation. The franchisor provides a system that has been proven to work, including providing trademarks and logos, and training and marketing support.
The respondents’ staff members rarely visit franchisees, as the respondents do not control the day-to-day operations of franchisees. Franchisees do not offer services on behalf of the franchisor. Franchisees pay fees, including initial franchise fees, royalty fees and advertising fees to the franchisor to use the brand.
Area franchisees are responsible to assist franchisees with the development of the brand. They visit franchisees on a quarterly basis and are responsible to oversee between 20 and 25 franchisees. The respondents testified that the area franchisees do not control the day-to-day operations of franchisees in their area.
The respondents testified that franchisees are separately owned and operated businesses. They are responsible for example for their own rent payments, accounting services, equipment leases, royalty payments, advertising fees, business licenses, matters related to employment relationships with employees, tax filings and payments, compliance with municipal requirements, store profitability and the manner in which they run and operate their business.
The respondents provide new franchisees with five weeks of training to ensure that franchisees are knowledgeable in managing their business. The training program includes in-store training at another franchisee, in class and online training and assessments. Topics include managing a business, marketing and policies and procedures. The training does not include topics such as compliance with income tax and other taxation issues, employment standards and municipal by-laws.
The respondents’ internal policy includes a process for enforcing franchise agreements. When there is an alleged violation of a franchise agreement, the area representative acts as a coach to assist the franchisee by reviewing the alleged violation and agreeing on corrective actions. If the franchisee does not correct its actions, the matter is escalated to the respondents and a written notice is issued to the franchisee. The respondents work cooperatively with the franchisee to ensure correction of the alleged violation. In cases of serious violations with no correction, a notice of default may be issued. If the franchisee does not adhere to the notice of default within delay, the franchise agreement may be terminated. Although the respondents have issued very few notices of default and terminations of franchise agreements, the respondents have the power to terminate the franchise agreement where there is a serious violation.
11In cross-examination, Mr. Boratto testified that the main goal of the Franchise Agreement with the Store is to protect the brand and franchise system which requires certain control over the Store. Witnesses for the respondents both testified that the Owner must abide by certain standards, including:
training, continuing education courses and regional meetings offered or mandated by the respondents (s. 5.1(b) and 10.3 of the Franchise Agreement);
providing a business plan to the respondents in a form reasonably prescribed by the respondents (s. 5.1(d) of the Franchise Agreement);
maintaining minimum business hours and further extended hours as specified from time to time by the respondents (s. 5.1(j) of the Franchise Agreement);
abiding by reasonable directives pertaining to advertising, issued from time to time (s. 5.1(l) of the Franchise Agreement);
maintaining sanitary conditions and recommended sanitary standards as a result of inspections and audits recommendations (s. 5.1(l) of the Franchise Agreement);
prominently displaying advertising signs of such nature, form, colour, number, location and size as designated by the respondents (s. 5.1(l) of the Franchise Agreement);
permitting the respondents to inspect the operation of the Store at any time and from time to time during normal business hours (s. 5.1(m) of the Franchise Agreement);
contracting with internet providers acceptable to the respondents and not maintaining a franchisee separate website (s. 5.1(n) of the Franchise Agreement);
holding insurance coverage as may be required under the lease and other coverage as the respondents may require from time to time (s. 5.2(a) of the Franchise Agreement);
participating in the respondents’ communications networks, shipping/delivery systems, national accounts, electronic mail/voice systems, point-of-sale systems, internet, email and other systems, programs or networks developed on behalf of the respondents (s. 5.3 of the Franchise Agreement);
installing and using only document production equipment as the respondents may designate from time to time (s. 5.3(b) of the Franchise Agreement);
purchasing from the respondents or an approved supplier all goods, services, equipment and furnishings as required from time to time in connection with the operations of the Store (s. 8.1 of the Franchise Agreement);
acquiring and adopting software as the respondents reasonably deem necessary, having regard to ongoing business dynamics and changes in the marketplace (s. 9.1 of the Franchise Agreement);
producing data that the respondents require from time to time (s. 9.2 of the Franchise Agreement).
12In addition, the Franchise Agreement includes a clause by which the respondents commit to providing continuing advice and guidance related to purchasing goods, supplies, equipment and furnishings, the implementation of approved advertising and promotional programs, the establishment and maintenance of administrative, bookkeeping, accounting, inventory control and general operating procedures and the provision of special techniques, instructions and other operational developments (s. 10 of the Franchise Agreement).
13The respondents may also terminate the Franchise Agreement for a number of reasons including failure to make reports, failure to remain open as required, incomplete mandatory training, and engaging in any conduct that reflects unfavourably upon or is detrimental or harmful to the franchise or good name, goodwill or reputation of the respondents (s. 13.1 of the Franchise Agreement).
analysis and decision
The Law
14The question at issue is whether, pursuant to section 46.3 (1) of the Code, the respondents are deemed liable for the acts of the Owner:
46.3(1) For the purposes of this Act…any act or thing done or omitted to be done in the course of his or her employment by an […] employee or agent of a corporation […] shall be deemed to be an act or thing done or omitted to be done by the corporation […]
15In determining whether s. 46.3(1) of the Code applies to the specific facts of this case, the Tribunal must consider:
whether the respondents are corporations;
if so, whether the Owner is an employee or agent of the respondents pursuant to s. 46.3(1) of the Code;
if so, whether the Owner was acting “in the course of his employment” in his interaction with the applicant, pursuant to s. 46.3(1) of the Code.
16For the reasons below, I find that the Owner is not an employee or agent of the respondents and I need not consider the first and third issues.
Parties’ Arguments
17The applicant maintains that the common law vicarious liability criterion (i.e. whether the franchisor is in control of the day-to-day operations of the franchisee) is not determinative of an analysis under s. 46.3(1) of the Code. See McCormick v. Fasken Martineau DuMoulin LLP, 2014 SCC 39, [2014] 2 S.C.R. 108 (“McCormick”); Pannu v. Prestige Cab Ltd., 1986 CanLII 6476 (AB CA), [1986] A.J. No. 1717 (Alta C.A.) and Reference re. Individual’s Rights Protection Act, R.S.A. 1980, 1986 ABCA 203 (“Reference”); Srouji v. Direct IME, 2012 HRTO 449 (“Srouji”); Manu v. Centum Fundamental Financial Inc., 2015 HRTO 725 (“Manu”); and King v. Toronto Police Services Board, 2009 HRTO 644 (“King”).
18He submits that the appropriate test for the Tribunal to apply is whether the franchisor was in a position to take effective remedial action in regard to a valid human rights complaint. The applicant argues that in the present case, it is the respondents that had the right and power to take remedial action against the Owner and to provide the Owner with appropriate human rights training and education.
19The applicant maintains that if the Tribunal disagrees with the proposed approach and takes the position that the franchisor must exert substantial control over the day-to-day operations of the franchisee, the respondents did exert that control. In addition to the substantial control over the Owner established through the detailed Franchise Agreement, the respondents required the Owner to participate in training provided by them; they had the power and the authority to remove signage from the Store; they visited the Store and viewed the surveillance camera video recording; and they imposed policies and guidelines onto the Owner, including policies and guidelines related to providing services to people who use service animals.
20The applicant maintains that the respondents further exerted their control over the Owner by issuing a Default Notice for violation of the Franchise Agreement because the Owner’s conduct reflected unfavourably upon the respondents. More particularly, the Default Notice was issued because the Owner failed to accommodate the applicant and provided inappropriate services in violation of the Code. The applicant argues that the respondents’ control over the Owner is substantial and includes the power and authority to terminate the Franchise Agreement for further breaches of that nature.
21The applicant distinguishes Elgin, above, from the circumstances present in this case. In Elgin, it was a manager/employee of the franchisee who had allegedly conducted himself in a discriminatory manner while in this matter; it is the Owner’s conduct, not one of his employees, that is at issue. The applicant argues that this is a material difference.
22The respondents argue that the franchisor/franchisee relationship is unique. They maintain that, when applying the common law concept of “vicarious liability”, tribunals consider whether the franchisor exercises substantial control over day-to-day operations of the franchisee. See 671122 Ontario Ltd. v. Sagaz Industries Canada, [2001] S.C.R. 983 (“Sagaz”) and Maycock v. Canadian Tire Corp., 2004 BCHRT 33 (“Maycock”).
23The respondents maintain that the franchisee is an independent contractor that is neither in an agency nor an employment relationship with them. It is the respondents’ contention that section 19 of the Franchise Agreement confirms this:
- Franchisee is, and shall be, an independent contractor, and nothing herein contained shall be construed so as to create an agency or employment relationship, a partnership, a fiduciary relationship or a joint venture between the parties. Neither MBE Canada nor Franchisee shall act as agent for the other and neither MBE Canada nor Franchisee shall guarantee the obligations of the other or in any way become obligated for the debts or expenses of the other, unless agreed upon in writing.
24The respondents admit that the very essence of a franchisor/franchisee relationship is characterized by the need for a certain level of control over the methods of operation of the business. They argue that in order for the franchisor to maintain its trade mark and franchise system, it must have direct or indirect control over the character or quality of the wares or services, which benefits both franchisor and franchisee. The goal is to ensure a consistent experience among the customer base.
25The respondents maintain that in a franchise relationship, the franchisee does not provide a service to the franchisor in return for remuneration but operates his or her own business to his own account and for his own profit. It is not a service provided on behalf of or for the franchisor. If the franchisee is successful, he or she is the one who benefits from that success.
26The respondents maintain that, because of the specific nature and objectives of franchise agreements, they typically contain similar provisions. The respondents argue that if the operational standards contained in the typical franchise agreement for the protection of a brand and franchise system were broadly construed as capable of meeting the vicarious liability control test, franchisors would almost always be subject to vicarious liability for the actions of their franchisees.
27The respondents argue that Elgin, above, applies to this case and confirms the criterion of “substantial level of control over the day-to-day operations of the franchisee” to decide whether the franchisor is vicariously liable.
Analysis
28It is well established that parties cannot contract out of their obligations under the Code and contractual language used by parties in creating and describing their relationship is not necessarily conclusive of the actual relationship. See Maycock, above at para. 47. As such, section 19 of the Franchise Agreement is not determinative and I must consider other factors to ascertain the nature of the relationship.
29The Tribunal in Srouji, at para. 12, noted that the common law concept of vicarious liability is not determinative when interpreting s. 46.3(1) of the Code and the Tribunal may take a different and broader approach when considering a statutory provision. I comment below on the application, if any, of a proposed new approach for determining deemed liability, more specifically “whether the franchisor was in a position to take effective remedial action in regard to valid human rights complaints”.
30I begin by first considering the Elgin decision, above.
31The applicant in Elgin, a Black woman, alleged that she had experienced discrimination with respect to services because of her race, colour, ethnic origin and sex. Specifically, she alleged that she purchased a coffee at a franchisee shop and the manager would not allow her to sit and drink her coffee. The Tribunal applied the reasoning used by the British Columbia Human Rights Tribunal (“BCHRT”) in Maycock to interpret s. 46.3(1) of the Code and consider whether the franchisor exercised substantial control over day-to-day operations and/or employees of the franchisee. The Tribunal also relied on Prasad v. Sunwood Drugs and others, 2011 BCHRT 165 (“Prasad”), which involved a complaint of discrimination in employment on the basis of sex (pregnancy) against Shoppers Drug Mart, and in which the BCHRT refused to add the franchisor as a respondent.
32The applicant argues that the facts in Elgin are materially different than the facts in this case. I disagree. In both cases, the franchisees were the direct service providers. In both cases, the franchisees would have been liable for violations of the Code in the provision of services. I appreciate that in Elgin the services were provided by a directing mind and here they were provided by the owner of the franchise. In my view that distinction is not material to the rationale of the Decision.
33The Tribunal noted that the franchise agreements in Maycock, Prasad and Elgin appeared to be similar. Some of the relevant clauses in Elgin were noted as follows:
The franchise agreement defined the legal relationship as one between independent contractors where neither was the master or servant of the other and they were not in a relationship of partners or joint venture.
The franchisor granted the franchisee a license to operate a shop and a non-exclusive license to use the trademark while in return the franchisee paid the franchisor an initial franchise fee and royalty payments on gross sales;
The franchisor trained staff of the franchisee upon opening a new shop and continued to provide operating assistance from time to time. The franchisee on the other hand was responsible for hiring all employees. Once hired they were solely the employees of the franchisee, they were under the exclusive control of the franchisee and the franchisee was responsible in all respects for the employees’ employment and conduct.
The franchisor provided almost no control over the operations of the franchisee but could be requested by the franchisee to provide consultation relating to a number of different items such as buying materials, operating the store, bookkeeping, accounting and inventory. The franchisor however exerted no control over such items.
Each month, the franchisee would provide sales reports to the franchisor outlining total gross sales and from that, royalty percentages would be paid to the franchisor.
The franchisee was required to purchase supplies through authorized suppliers of the franchise and was required to contribute on a monthly basis to a fund related to advertising and the like.
The franchisor exercised no control over the day-to-day operations of the premises, including its administration, payment of its rent or its suppliers.
34The Tribunal dismissed the application against the franchisor because it did not have a sufficient degree of control over the franchisee to conclude that it provided services in the franchisee shop or that it employed its staff. The Tribunal found that the applicant failed to convincingly point to provisions of the agreement that would distinguish it from the typical franchise agreement and show that the respondent exercised substantial control over the day-to-day operations of the franchisee.
35I find that the Franchise Agreement in this matter contains provisions that are similar to those in Elgin, above. Particularly, it provides that the Owner shall hire all employees and be exclusively responsible for the terms of their employment and compensation. The uncontested evidence showed that the Owner is responsible for matters related to employment relationships with employees, rent payments, accounting services, equipment leases, royalty payments, advertising fees, business licenses, tax filings and payments, compliance with municipal requirements, store profitability and the manner in which he runs and operates his business.
36I recognize that the Franchise Agreement allows the respondents to have a certain level of control over the methods of operations of the Owner’s business, but such control is necessary and limited to the purpose of maintaining the brand, the franchise system and the quality of the products and services provided under the brand. As such, it allows the respondents for example, to issue reasonable directives from time to time pertaining to advertising and to inspect the Store from time to time. As in Elgin, above, these provisions have qualifying terms such as “from time to time”, and do not give the respondents substantial control over the day-to-day operations of the Store. This is the nature of a franchise relationship and the applicant failed to establish that the respondents exercise substantial control over the day-to-day operations of the Store. As a result, I find that s. 46.3(1) of the Code does not apply in this context.
37Even if I apply the Supreme Court of Canada’s interpretation of the terms “employed” and “employment” adopted in McCormick, above, I come to the same conclusion.
38The McCormick decision did not address the issue of deemed liability or vicarious liability. However, the Supreme Court of Canada was asked to consider whether an equity partner in a law firm is in an employment relationship with the firm. In so doing, the Court provided a test for determining whether an employment relationship existed at para. 28:
What is more defining than any particular facts or factors is the extent to which they illuminate the essential character of the relationship and the underlying control and dependency. Ultimately, the key is the degree of control, that is, the extent to which the worker is subject and subordinate to someone else’s decision-making over working conditions and remuneration.
39I find that the respondents’ relationship with the Owner is not one of control and dependency, as described in McCormick. The Owner is working for his own benefit and draws his income directly from the provision of services and sales to customers. The Owner is not dependent on the respondents for remuneration, but instead pays fees to the respondents for the use of wares and the brands. The Owner is an employer, not an employee. In the absence of a control/dependency relationship between the respondents and the Owner in any of the significant decisions affecting the workplace, I find that there is no employment relationship between the respondents and the Owner.
40The applicant argues that the Reference case, above, is relevant as it addresses the issue of whether independent contractors, more particularly in that case a taxi company and its taxi drivers, are in an employment relationship. That is a case decided in 1986, before the McCormick decision, under different legislation and involving a context that is not one of franchisor/franchisee. For these reasons, I find that the case is not applicable to this matter.
41The applicant proposes a new criterion to determine vicarious liability of a franchisor, referred to in Prashad and Maycock: whether the franchisor was in a position to take effective remedial action in regard to a valid human rights complaint. If I were to apply the criterion to the facts of this case, I would come to the same conclusion. The Owner operates his own business for his own profit and he is the only service provider in this case. The respondents are not providing services through the Owner or the Store and do not control the day-to-day services provided to clients. Like all service providers, the Owner has a legal obligation to ensure full compliance with the Code and is uniquely positioned to take remedial action in regard to the human rights complaint in this matter. In fact, once made aware of the alleged violation, the Owner reacted immediately, he sought legal advice and he apologized to the applicant.
42This is not to say that the respondents should have refrained from responding to the applicant’s complaint. The respondents acted as a responsible franchisor, fairly and expeditiously, to protect the brand and franchise system. Such actions were taken in the context of their relationship with the franchisee in accordance with the Franchise Agreement. Other than to advise the applicant of the manner in which they addressed his concerns with the Owner within the context of the franchise relationship, their actions were not taken to address the direct provision of services by the Owner. The Owner was responsible for doing so and acted accordingly.
43I find that the actions of the respondents are those of a diligent franchisor and they do not alter the relationship between the respondents and Owner to one of control over the day-to-day activities of the Owner or to one of control and dependency. In conclusion, even without being liable for the Owner’s actions, the respondents used due diligence to address a serious matter.
44The Application is dismissed.
Dated at Toronto, this 3rd day of October, 2016.
“Signed By”
Josée Bouchard
Vice-chair