Steven Goldman

Following a successful application in which a franchisor was found to have wrongfully terminated a franchise agreement and the franchisee was ordered reinstated, the court addressed costs.

The applicants sought full indemnity costs under a contractual provision in the franchise agreement, or alternatively partial indemnity costs.

The respondents argued the hours claimed were excessive and that reductions were warranted because several issues remained to be tried.

The court declined to award full indemnity costs, holding that the contractual clause did not displace the court’s discretion and there was no misconduct justifying elevated costs.

Partial indemnity costs were awarded with a portion payable immediately and the balance payable in the cause of the upcoming trial.

A franchisee brought an application seeking reinstatement of its franchise after the franchisor terminated the franchise agreement for failure to maintain an approved voicemail system.

The court found the franchisor failed to comply with the contractual termination provisions requiring thirty days’ notice to cure a default.

The franchisor’s reliance on a prior settlement agreement to justify immediate termination was rejected, and the alleged breach did not justify bypassing the contractual notice period.

The court ordered immediate reinstatement of the franchise and possession of the leased premises, with damages to be determined at trial.

The court further held that, had termination been valid, relief from forfeiture would have been appropriate given the disproportionate loss relative to the alleged default.