Franchise Law - OCA

The appellants, out-of-province franchisors, appealed a motion judge's decision dismissing their challenge to the Ontario Superior Court's jurisdiction to hear an action brought by eight Saab dealerships, five of which were located outside Ontario.

The Court of Appeal upheld the motion judge's finding of jurisdiction simpliciter based on the appellants carrying on business in Ontario, noting that joining the out-of-province plaintiffs promoted commercial efficiency.

The Court also upheld the motion judge's forum non conveniens analysis and costs award.

The appeal was dismissed.

The appellant appealed a summary judgment order finding that its relationship with the respondent was that of franchisor and franchisee, entitling the respondent to rescind their agreements under the Arthur Wishart Act due to a lack of disclosure.

The Court of Appeal upheld the finding on liability but found the motion judge's reasons for quantifying damages insufficient.

The appeal was dismissed regarding liability, and the matter was remitted to the motion judge to determine the quantum of damages in excess of the conceded amount.

The franchisor sued the franchisees for breach of contract, and the franchisees counterclaimed for rescission of the franchise agreement under s. 6(2) of the Arthur Wishart Act, alleging the franchisor failed to disclose ongoing litigation against a competing business.

The motion judge granted partial summary judgment dismissing the rescission claim, finding the undisclosed litigation was not a stark and material deficiency.

The Court of Appeal dismissed the franchisees' appeal, holding that summary judgment was appropriate and that the litigation, which was commenced to protect franchisees, was not a material fact and its omission did not amount to a complete failure to provide a disclosure document.

The appellants appealed a partial summary judgment declaring that the franchise disclosure document they provided to the respondents was materially deficient, entitling the respondents to rescind the franchise agreement under the Arthur Wishart Act.

The Court of Appeal upheld the motion judge's decision, finding that summary judgment was appropriate and that the disclosure document's failure to include properly verified financial statements, a compliant certificate, and information about ongoing litigation amounted to a material deficiency equivalent to no disclosure at all.

The moving parties (defendants) sought a stay of a motion judge's order dismissing their jurisdictional challenge as an abuse of process, pending their appeal of that order.

They also sought an extension of time to perfect the appeal.

The Court of Appeal applied the RJR-MacDonald test and granted the stay, finding that the appeal raised serious issues regarding jurisdiction and joinder, that there was some risk of irreparable harm due to the uncertain law on attornment, and that the balance of convenience favoured the moving parties.

The extension of time was also granted on consent.

The appellants appealed an order regarding whether the franchisor failed to provide a disclosure statement under section 6(2) of the Arthur Wishart Act.

The Court of Appeal dismissed the appeal, agreeing with the motion judge that whether a disclosure statement was never provided must be determined by examining the deficiencies in the material actually delivered.

The court noted that compliance with sections 5(3) and 5(4) of the Act remains an open question for trial.

The appellants appealed orders arising from a franchise rescission dispute under the Arthur Wishart Act, 2000.

The respondents had obtained partial summary judgment on rescission-related claims, and a Master fixed compensation under s. 6(6).

The appellants also sought to amend their pleading to assert equitable set-off, but the appeal court upheld the interpretation that any such amendment was confined to the still-outstanding s. 7 claims and could not reopen the already-adjudicated s. 6 claims.

The court further held that the Master's factual findings attracted deference and disclosed no misapprehension, error in principle, or palpable and overriding error.

The appeals were dismissed with fixed costs to the respondents.

The appellants appealed a trial judge's decision regarding a franchise dispute.

They argued that the trial judge erred in deducting rent and related expenses under s. 6(6)(a) of the applicable Act, and in finding that a letter dated May 2, 2007, constituted a five-year franchise agreement.

The Court of Appeal dismissed the appeal, finding no error in the damages calculation and concluding that the trial judge's finding regarding the letter was reasonable and supported by the evidence.

Costs of $8,000 were awarded to the respondents.

The appellants appealed a summary judgment dismissing their proposed class action claims against a food distributor.

The appellants alleged the distributor was a 'franchisor's associate' under the Arthur Wishart Act in relation to a vending machine program run by a third party.

The Court of Appeal upheld the motion judge's finding that the distributor did not control the third party and was therefore not a franchisor's associate.

The appeal was dismissed.

The appellant franchisee appealed the dismissal of its action against the respondent franchisor for breach of the statutory duty of fair dealing under the Arthur Wishart Act.

The appellant argued that the franchisor failed to provide sufficient disclosure regarding a right of first refusal for a new restaurant location, specifically concerning the final lease terms and the size of the exclusive territory.

The Court of Appeal dismissed the appeal, upholding the trial judge's finding that the franchisor acted in good faith and in a commercially reasonable manner, and that the appellant's decision to pass on the location was an informed one based on its own financial position and lack of confidence in the landlord.

The appellant franchisees commenced a proposed class action against the respondent franchisors for breach of contract, misrepresentation, unjust enrichment, and breach of the duty of good faith.

The motion judge granted summary judgment dismissing the action, finding that the franchisor's conversion to a new donut production system and pricing requirements did not breach the franchise agreement or the duty of good faith.

The Court of Appeal upheld the decision, agreeing that the franchisor's actions were a rational business decision and that the contract did not require every new method or product to be profitable in its own right.

The appellants appealed an order dismissing their claim for statutory rescission of a franchise agreement.

The Court of Appeal agreed with the motion judge that the notice of rescission was provided more than two years after the franchise agreement was entered into, pursuant to s. 6(2).

The appeal was dismissed, as it was plain and obvious the claim could not succeed.

The appellants appealed a motion judge's decision that a restrictive covenant in a franchise agreement was not ambiguous to the point of being unenforceable as a pure question of law.

The Court of Appeal dismissed the appeal, finding that the provision was not facially ambiguous when read in the context of the entire agreement, and that any factual ambiguities would need to be determined at trial.

The appellants appealed a decision declaring the respondents were entitled to rescind a second franchise agreement due to the appellants' failure to provide a disclosure document.

The Court of Appeal upheld the application judge's findings that the matter was appropriate for an application, that the second agreement was a 'franchise agreement' under the Arthur Wishart Act triggering disclosure obligations, and that the rescission claim was not statute-barred because the limitation period only began when the franchisor disputed the notice of rescission.

The appellants appealed an order declaring that the respondent Merali was not a 'franchisor's associate' under the Arthur Wishart Act.

The Court of Appeal allowed the appeal, finding that the application judge's factual finding that Merali controlled the franchisor rendered him a franchisor's associate.

Consequently, Merali was declared jointly and severally liable with the other respondents for payments owed under s. 6(6) of the Act.

The appellants entered into a franchise agreement with the respondents.

The business failed, and the appellants sought to rescind the agreement under s. 6(2) of the Arthur Wishart Act, arguing the franchisor failed to provide adequate disclosure.

The application judge found the disclosure was incomplete but not void ab initio, restricting the appellants to the 60-day rescission period under s. 6(1).

The Court of Appeal allowed the appeal, holding that the disclosure document was so materially deficient—lacking a signed certificate, financial statements, and other required information—that it amounted to no disclosure at all.

The appellants were therefore entitled to the two-year rescission period under s. 6(2).

The appellant franchisee received a disclosure document from the respondent franchisor more than 14 days after paying a franchise fee, but six months before executing the franchise agreement.

Nearly two years later, the franchisee sought to rescind the agreement under the Arthur Wishart Act.

The Court of Appeal upheld the motion judge's finding that the franchisee had no right of rescission.

Section 6(2) applies only when no disclosure document is ever provided, and section 6(1) requires rescission within 60 days of receiving a late or deficient document, which the franchisee failed to do.

The appellants appealed a partial summary judgment granted by the motion judge in a franchise dispute.

The Court of Appeal found no error in the motion judge's decision, noting the evidence in the record and the absence of any contrary explanation from the franchisor.

The appeal was dismissed with costs.

The appellants appealed a trial judgment granting rescission of an agreement of purchase for a franchise donut shop.

The trial judge found that a discrepancy in the agreement regarding minimum rent amounted to a misrepresentation by the vendor, as the landlord had increased the square footage upon which the base rent was calculated.

The Court of Appeal held that the trial judge was entitled to reach this conclusion on the evidence and found no error justifying intervention.

The appeal was dismissed with costs.

In a commercial franchise and sublease dispute, the appellant challenged an order granting the respondents possession of premises.

The court held the respondents failed to establish any claim to possession under an alleged new lease because they were not parties to it and adduced no admissible evidence that it was entered into on their behalf.

The court also held the respondents failed to prove the factual foundation for any continuing month-to-month tenancy under the original lease, namely the absence of notice from the landlord.

The appeal was allowed, the judgment below set aside, and the application dismissed with costs to the appellant.