Sept. 3, 2012
By Julius Melnitzer
Two landmark franchise class action judgments have left both franchisors and franchisees with something to cheer about.
Early this year, franchisors across Canada hailed the Ontario Superior Court ruling involving Tim Hortons, Fairview Donut Inc. v. The TDL Group Corp., 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 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 has little doubt that franchisee lawyers will be trying to make the most of the decision. “Even though Justice Tingley acknowledged that franchisors are not the guarantors of franchisees’ success, we will be seeing franchisees’ lawyers trying to hold franchisors responsible for closures and for the impact of competitive tides,” Dolman says.
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