Canada: Top Ten Canadian Franchise Law Cases And Developments Of 2013

As 2013 comes to an end, the Cassels Brock Franchise Group would like to take this opportunity to highlight the ten most significant franchise law cases and developments of the year.

1. 5 of 10 Canadian Provinces Now Have Franchise Laws

With the Manitoba Franchises Act coming into force on October 1, 2012, there is now franchise legislation in effect in five Canadian provinces – Alberta, Ontario, New Brunswick, Prince Edward Island and Manitoba. If you plan to offer franchises in any of these provinces or currently have franchises in these provinces that require renewal, you need to ensure that your franchise disclosure document ("FDD") complies with legal requirements in these jurisdictions. All of these provinces' legislation include the requirement that franchisors provide an FDD to prospective franchisees at least 14 days prior to the prospective franchisee signing any agreement or paying any consideration in respect of the franchise. Most franchisors now have a single form of Canadian FDD intended for use in all five provinces currently mandating pre-sale disclosure. With some small amount of effort by counsel and franchisor, a franchisor can have a form of FDD that is compliant with all five franchise law provinces.

2. British Columbia Considers Becoming the 6th Province With a Franchise Law

In April 2013, the British Columbia Law Institute ("BCLI") issued a Consultation Paper on a Franchise Act for British Columbia (the "Consultation Paper") for the purpose of making a recommendation to the Government of the Province of British Columbia to enact franchise legislation in that province. BCLI has recommended that British Columbia should enact franchise legislation similar to the legislation already in force in five other Canadian provinces: Alberta, Ontario, New Brunswick, Prince Edward Island and Manitoba. The possibility of a British Columbia franchise law in the next few years is a significant development for franchisors with existing franchisees in the province, or franchisors who intend to develop franchises there. A copy of Cassels Brock's original article on the Consultation Paper can be found here.

3. Cassels Brock Successful in Having Class Action Opt-outs Permitted

In a landmark unanimous franchise class action decision, the Ontario Court of Appeal overturned a lower court decision that had invalidated certain opt out notices delivered in a class proceeding between Pet Valu Canada Inc. and its franchisees. The notices had been invalidated by the Ontario Superior Court of Justice due to allegations of misleading information and unfair pressure by a group of class members who opposed the class action. The Court held that the class members' campaign to encourage other franchisees to opt out of the class action was a proper expression of opinion by these franchisees. The Court confirmed that class members have an "unassailable right to speak out in opposition to [a] class proceeding in an attempt to convince other class members to opt out" in the context of "acceptable intra-class debate". Cassels Brock acted for Pet Valu Canada Inc. in this matter. A copy of the decision can be found here.

4. Ontario Set to Introduce Menu Labelling Laws

In October 2013, the Ontario Government advised that it was going to introduce legislation that requires large chain restaurants to place caloric and other nutritional information on their menus and menu boards. The Bill will be introduced in the winter of 2013/14 after consultations with parents and representatives from the food industry and health-care sector. The consultations will determine which restaurant chains should be subject to the proposed requirement to include caloric information alongside the price of the food offered. The Ontario Government has indicated that the legislation will be introduced to help Ontarians make healthy food choices by mandating nutritional information to create a more transparent food industry. This follows a voluntary program launched in the Province of British Columbia. A copy of Cassels Brock's article on this proposed legislation can be found here.

5. Cassels Brock Successfully Obtains Injunction Against Former Franchisee and Non-Parties

In August 2013, Cassels Brock successfully obtained an injunction to enforce non-competition and non-solicitation covenants in a franchise agreement between Pet Valu and a former Pet Valu franchisee. The decision is unique in that the Court granted the injunction against the former franchisee company and its principal, as well as the principal's husband and the new company he had established to ostensibly operate the competing business. Neither the husband nor his new company were party to the franchise agreement containing the restrictive covenant. However, the Court bound them to the injunction order on the basis that the husband had set up the new company to hide the wife's involvement in the competing business and to assist her to compete against Pet Valu. The Court described such activities as "a transparent effort by all of the defendants to avoid the restrictive covenants." As such, Pet Valu was granted all of the injunctive and additional relief it sought against each of the defendants. A copy of the decision can be found here.

6. Midas Franchisee Class Action Settled; Court Comments on "Developments" in the Law Regarding Fair Dealing Claims

Over four years after the certification of the case as a class proceeding, and over six years after the action was commenced, the Ontario Superior Court of Justice approved a settlement of the class action brought on behalf of Midas franchisees against their franchisor regarding 2003 changes to the Midas franchise system. The Court approved a settlement that provides for the franchisor paying franchisee class members a total of $8,500,000, inclusive of interest, legal fees, disbursements, administration expenses and taxes. In approving the settlement, which was for significantly less than the amount originally claimed by the plaintiff ($75,000,000). In approving the settlement, the Court noted the changing landscape in Canadian franchise litigation, particularly in respect of the recent Tim Hortons decisions where the Ontario Court of Appeal outlined the difficulty of proving bad faith and the lack of fair dealing in respect of franchise system changes. A copy of the approval decision can be found here.

7. Ontario Court of Appeal Upholds Decision on Franchise Right of First Refusal

In 3574423 Canada Inc. v. Baton Rouge Restaurants Inc., the Ontario Court of Appeal upheld the judgment of the Ontario Superior Court of Justice dismissing the action of a franchisee who was seeking damages for the alleged failure of a franchisor to properly and fully provide notification in accordance with the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000, c. 3 when it offered the franchisee the opportunity to acquire an additional franchise. A copy of the decision can be found here.

8. Alberta Court Reminds Franchisors of the Importance of a Properly-Signed Disclosure Certificate

1448244 Alberta Inc. v. Asian Concepts Franchising Corporation, a decision of the Court of Queen's Bench of Alberta, provided a reminder of the importance of technical compliance with the disclosure requirements in Canada, particularly those relating to certificates of full disclosure, and of the consequences of failing to properly comply with those obligations. In this case, the plaintiff franchisee alleged that the defendant franchisor, Asian Concepts Franchising Corporation, had provided a significantly deficient disclosure document, and the franchisee sought to obtain partial summary judgment in the form of a declaration that the disclosure document provided was not "substantially complete" within the meaning of the Alberta Franchises Act ("the Act") and its Regulations, as it sought to rescind its franchise agreement. The Court held that an incomplete certificate prevented the disclosure document from being substantially complete as required by the Act, and granted partial summary judgment. A copy of the decision can be found here.

9. Ontario Court Releases Controversial Decision Regarding the Calculation of Rescission Damages

The Ontario Superior Court of Justice decision in 2189205 Ontario Inc. et al. v. Springdale Pizza Depot Ltd. et al., addressed the issue of whether any net profits of a franchisee could be set off against losses for which the franchisee was to be compensated pursuant to section 6(6) of the Arthur Wishart Act (Franchise Disclosure) 2000, S.O. 2000, c. 3. The Court ultimately refused to net out profits against section 6(6) damages. A copy of the decision can be found here and an analysis by Cassels Brock of this decision can be found here.

10. Ontario Court of Appeal Upholds Rejection of Claim that Distributor was a Franchisor's Associate

In Zwaniga v. Johnvince Food Distribution, the Ontario Court of Appeal upheld an Ontario Superior Court of Justice decision that a distributor was not a "franchisor's associate" under the Ontario franchise legislation, the Arthur Wishart Act (Franchise Disclosure), 2000. The Court of Appeal agreed and held that the distributor was neither a partner nor "franchisor's associate" as it did not exercise the requisite degree of control over the franchisor to be considered an "associate," and agreed that summary judgment in favour of the distributor was appropriate. A copy of the decision can be found here.

On behalf of the Cassels Brock Franchise Group, happy holidays to you and your families.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions