Mar 7, 2012
By Julius Melnitzer, www.lexpert.ca
Franchisors across Canada are hailing the Ontario Superior Court's recent decision in Fairview Donut Inc. and Brule Foods Ltd. v. The TDL Group Corp. and Tim Hortons Inc. as a sign that judges will be taking a more balanced approach to franchise litigation going forward.
“Because the purpose of Canadian franchise legislation is to redress potential power imbalances between franchisors and franchisees, Canadian courts have tended to interpret this legislation broadly in favour of franchisees,” says Jennifer Dolman, who represents franchisors out of the Toronto office of Osler, Hoskin & Harcourt LLP. “If you look at the jurisprudence as a pendulum, Tim Hortons represents a swing back to the middle of the spectrum.”
Dolman says … that the 166-page judgement, in which Strathy dismissed the action, is a highly persuasive one and will be influential: “I agree that Strathy does not make any novel points, but the manner in which he states the law and the length he goes to make his points make the decision a powerful precedent that will affect future cases.”
“The court made it clear that the franchisees had no right to make a profit on anything in particular,” Dolman says. “The court recognized that the heart of franchising was uniformity and that individual franchisors could not just pick and choose what they wanted to comply with.”
The result might have been different, Dolman observes, if the franchisees were unprofitable. “But this was not the right system to attack on the basis of particular items' profitability,” she says.
For more on the recent Tim Hortons decision, see our Osler Update entitled "Franchise and Competition Class Actions - Dismissal of Tim Hortons Class Action Is Good News for Franchisors".