Franchise Law - ODC

The plaintiff, a pizza delivery driver, brought a proposed class action against the franchisor and 141 franchisees alleging misclassification as an independent contractor.

Both the plaintiff and the franchisee defendants appealed the certification judge's decision.

The Divisional Court dismissed the plaintiff's appeal, upholding the finding that the franchisees were not 'common employers' under the Employment Standards Act.

The Court granted the franchisees' appeal in part, finding the motion judge erred in certifying a conspiracy claim among all defendants because the pleadings only alleged the franchisor controlled the agreements, not that the franchisees conspired with each other.

The certification of employment status as a common issue and the negligence claim were upheld.

The plaintiff and the franchisee defendants brought motions for leave to appeal the decision of Glustein J. dated December 17, 2024.

The Divisional Court granted both motions for leave to appeal.

Costs of the motions were fixed at $5,000 each and reserved to the panel hearing the appeal.

The appellant franchisee appealed a motion judge's decision denying an interlocutory injunction to prevent the termination of its franchise agreement.

The Divisional Court allowed the appeal, finding the motion judge's two-paragraph reasons were insufficient to permit meaningful appellate review as they failed to address the renewal clause, the factual disputes, or the RJR-MacDonald test.

The Court declined to decide the injunction on the merits, remitting it to a different judge.

The Court also held that the franchisor's undertaking not to terminate the agreement pending the determination of the injunction motion remained binding through the appeal process.

The appellant franchisor appealed a Master's order staying its application for declarations regarding the termination of a franchise agreement.

The Master had concluded that Ontario lacked jurisdiction or, alternatively, that Saskatchewan was the clearly more appropriate forum.

The Divisional Court upheld the Master's decision, finding no palpable and overriding error in the factual findings regarding the franchisor's regional office in Saskatchewan.

The court also affirmed that the territorial connection to Ontario was weak, as the conduct underlying the dispute occurred in Saskatchewan, where the respondents operated the franchise.

The appeal was dismissed.

The applicant franchisees sought leave to appeal an order that refused to restrain the franchisor from terminating their franchise agreements and granted an injunction restraining the franchisees from continuing to operate.

The court applied the test for leave to appeal under Rule 62.02(4)(b) of the Rules of Civil Procedure.

Finding no good reason to doubt the correctness of the motion judge's decision and no matters of general or public importance, the court denied leave to appeal and awarded costs to the respondent franchisor.

The appellants appealed a Master's decision dismissing their franchise dispute action for delay under Rule 24.01(1).

The action had been commenced in 2003 and struck from the trial list in 2010, with significant periods of inactivity largely attributed to the appellants' former counsel.

The Divisional Court denied the appellants' request to introduce fresh evidence of LinkedIn searches of the respondent's former employees.

The court upheld the Master's findings that the delay was inexcusable and that the passage of time and corporate restructuring had resulted in the loss of key witnesses, creating a substantial risk that a fair trial was no longer possible.

The appeal was dismissed.

The appellant appealed an interlocutory order consolidating her Superior Court action with the respondent's Small Claims Court action (which had been transferred to the Superior Court) and awarding costs.

The Divisional Court found that the motion judge correctly ordered consolidation because the two franchise dispute actions dealt in substance with the same set of issues.

As leave to appeal the costs award had not been granted, the appeal was dismissed.

The appellant franchisee appealed a trial decision dismissing its action against the respondent franchisor for alleged breaches of disclosure obligations under the Arthur Wishart Act.

The trial judge found no material change in the franchisor's business operations between the original 1996 agreement and the 2001 renewal, and concluded the appellant failed to mitigate damages by abandoning the franchise.

The Divisional Court dismissed the appeal, finding no palpable and overriding error in the trial judge's factual findings or assessment of damages.

The appellant franchisor appealed a Small Claims Court judgment awarding the respondent franchisee a return of their initial franchise fee.

The Deputy Judge had found that the franchise agreement was frustrated because the franchisor failed to secure a lease for the specific location contemplated in the agreement.

On appeal, the Divisional Court upheld the decision, finding no palpable and overriding error in the application of the doctrine of frustration.

The court also rejected the argument that frustration could not be found because it was not explicitly pleaded, noting that strict pleading standards do not apply in Small Claims Court.

The defendant franchisor appealed a motion judge's refusal to transfer the venue of a franchise dispute from Hamilton to Kitchener.

The defendant argued the motion judge erred by not requiring the plaintiffs' chosen venue to have a rational connection to the claim, relying on the Siemens decision.

The Divisional Court dismissed the appeal, clarifying that motions to change venue require a holistic application of the factors in Rule 13.1.02(2) of the Rules of Civil Procedure.

The court found no error in the motion judge's balancing of the factors and affirmed that a plaintiff's choice of venue, even if lacking a strong rational connection, may be upheld if the defendant fails to demonstrate that a transfer is desirable in the interests of justice.

The defendant franchisor sought leave to appeal an interlocutory order dismissing its motion to transfer the action from Hamilton to Kitchener.

The defendant argued that leave should be granted under Rule 62.02(4)(a) due to conflicting decisions regarding the proper test for venue transfers under Rule 13.1.02(2)(b).

The court found that there were indeed conflicting lines of cases in Ontario—specifically the 'Siemens' threshold approach versus the 'Hallman' holistic approach—and granted leave to appeal to the Divisional Court to resolve the inconsistency.

The plaintiff brought motions for leave to appeal two orders of a motion judge: one adding a competing car dealership as a party defendant, and another dissolving an interim interlocutory injunction that had restrained the defendant manufacturer from appointing an additional dealer in the plaintiff's market area.

The Divisional Court dismissed both motions for leave to appeal, finding no good reason to doubt the correctness of the motion judge's decisions and no issues of general importance to the administration of justice.

The defendants moved for leave to appeal an order certifying a class action brought by the plaintiff franchisee.

The defendants challenged the certification of several common issues relating to GMCL's alleged breach of statutory duties and Cassels Brock & Blackwell LLP's alleged negligence and breach of contract.

The Divisional Court granted leave to appeal in part.

Leave was granted regarding the common issues of whether GMCL failed to disclose material facts and interfered with the right to associate, as these required individual inquiries.

Leave was also granted regarding the claims against the law firm, as there was conflicting authority on whether loss of chance requires proof that the plaintiff would have acted differently but for the breach.

Leave was denied for the remaining issues, and a request to stay the action against the law firm was refused.

The appellant franchisor appealed a Small Claims Court decision finding it vicariously liable for a fire that occurred at a franchisee's location and caused smoke damage to the respondent's neighbouring business.

The Divisional Court allowed the appeal, finding the trial judge erred in law by characterizing the franchisee as an employee rather than an independent contractor.

The court further held that the trial judge erred by inferring the franchisee's negligence solely from its failure to attend the trial, as there was no evidence as to the cause of the fire.

The action against the franchisor was dismissed.

The plaintiffs sought leave to appeal a motion judge's decision that directed a trial on the issue of whether a franchise disclosure document was merely incomplete under s. 6(1) of the Arthur Wishart Act or amounted to no disclosure under s. 6(2).

The Divisional Court dismissed the motion, finding that the sufficiency of a disclosure document is a highly fact-specific inquiry.

The court concluded that the proposed appeal did not raise a question of general importance warranting the attention of the Divisional Court.

The plaintiff, a former franchisee, sued the franchisor for failing to renew its lease.

The defendants brought a motion for security for costs under Rule 56.01(1)(d), which was granted by the motions judge.

The plaintiff appealed to the Divisional Court, arguing that the defendants had unreasonably delayed in bringing the motion and that the order would stifle a valid claim.

The Divisional Court allowed the appeal, finding that the defendants had good reason to believe the plaintiff had insufficient assets years before bringing the motion, and that the motions judge failed to appreciate the evidence of delay.

The order for security for costs was set aside.

The plaintiff brought a motion for leave to appeal an order requiring it to pay $175,000 into court as security for costs.

The underlying action involved a claim for damages for breach of a franchise agreement.

The motions judge had found that the plaintiff failed to establish impecuniosity.

The Divisional Court granted leave to appeal, finding good reason to doubt the correctness of the order and that the issue of whether the merits of the case should be considered even if impecuniosity is not established transcends the interests of the parties and involves conflicting decisions.

The defendant franchisor appealed an order certifying a class proceeding brought by franchisees regarding the distribution of rebates and allowances under a standard form franchise agreement.

The franchisor argued that the representative plaintiffs could not fairly and adequately represent the class and had a conflict of interest because they were not indebted to the franchisor, unlike other franchisees.

The Divisional Court dismissed the appeal, finding no palpable and overriding error in the motion judge's conclusion that the representative plaintiffs could fairly and adequately represent the class and that their lack of indebtedness did not create a conflict of interest on the common issues.

The plaintiffs brought a motion to expedite the hearing of the defendant's appeal from an order certifying the action as a class proceeding.

The defendant opposed the motion, arguing that the appeal involved complex issues and that the proposed timeline was too short.

The court found that there were good grounds to expedite the appeal to prevent delay in the ongoing action and to address the vulnerability of the plaintiff franchisees.

The motion was granted, and the appeal was scheduled for the first available two-day period.

The defendant franchisor moved for leave to appeal an order certifying a class proceeding brought by franchisees regarding the withholding of rebates.

The defendant argued that the proposed representative plaintiffs had a conflict of interest with other class members who had different economic arrangements with the franchisor and feared disruption of their businesses.

The court granted leave to appeal, finding that the issue of whether the representative plaintiffs could fairly and adequately represent the class without conflict was open to serious debate and of general importance to the development of class action law.