The plaintiffs purchased an existing franchise and subsequently sought to rescind the franchise agreement under the Arthur Wishart Act, alleging the franchisor failed to provide a disclosure document.
The franchisor argued it was exempt under section 5(7) of the Act because the grant was not effected by or through it.
The court found that the franchisor did effect the transfer by requiring a new franchise agreement, a new sublease, and a new inventory fee, thereby voiding the exemption.
The court held the franchisor, its landlord affiliate, and its principal jointly and severally liable as franchisor's associates, awarding the plaintiffs $85,100 in damages.
