Franchise Law - SCJ

The plaintiffs, franchisees of a pizza franchise, brought a motion for partial summary judgment seeking a declaration that they validly rescinded their franchise agreement due to the franchisor's failure to provide a proper disclosure document under the Arthur Wishart Act.

The court found numerous material deficiencies in the purported disclosure document, including inadequate financial statements, missing certificates, and failure to provide the document as a single bound document.

The court granted the motion, declaring the agreement validly rescinded and finding the individual defendants and a related corporation to be franchisor's associates jointly and severally liable.

The issue of damages was referred to a Master.

The defendant franchisor sought leave to appeal an interlocutory order dismissing its motion to transfer the venue of a franchise dispute from Hamilton to Kitchener.

The moving party argued that leave should be granted under Rule 62.02(4)(a) because there are conflicting decisions in Ontario regarding whether a plaintiff's choice of venue must have a rational connection to the action before the court engages in a holistic balancing of factors under Rule 13.1.02(2)(b).

The court agreed that two conflicting lines of cases exist (the Siemens threshold approach versus the Hallman holistic approach) and granted leave to appeal to the Divisional Court to provide appellate guidance on the issue.

The defendants brought a motion to strike portions of the plaintiffs' amended statement of claim in a franchise dispute.

The plaintiffs, franchisees of a Cora restaurant, alleged misrepresentation, breach of contract, and breach of the Arthur Wishart Act after the franchisor opened another location nearby.

The court struck the breach of contract and negligence claims without leave to amend, finding they contradicted the express terms of the franchise agreement which granted no exclusive territory.

The misrepresentation claims were struck with leave to amend for lack of particularity.

The claims under the Arthur Wishart Act and for injunctive relief were allowed to proceed.