November 30, 2017
A Québec Superior Court judgment pertaining to the legality of royalty clauses in franchise agreements could have a widespread impact beyond the franchise industry, Osler partner Éric Préfontaine tells Lexpert Magazine. In their article, authors Julius Melnitzer and Sandra Rubin examine Lexpert’s top 10 list of cases that have cross-border implications. One of the cases the article discusses is Quesnel v. Group Jean Coutu (Quesnel), in which Justice Michèle Monast ruled that the arrangement between Michel Quesnel — a pharmacist and franchisee with Group Jean Coutu — and Group Jean Coutu did not amount to profit sharing. Éric, Co-Chair of Osler’s Class Actions Practice Group, explains why this case could affect other areas as well.
“The case could affect many issues that involve allegations of fee-sharing by professionals like lawyers or doctors,” Éric tells Lexpert.
Éric also emphasizes that the “expert evidence” in Quesnel was key to the outcome.
“The expert evidence was that the royalties charged by Jean Coutu were on the lower end of the reasonable scale,” Éric tells Lexpert.
Éric also questions the likelihood of the success of a suit by Sopropharm, which “filed a class action seeking to annul two provisions in their franchise agreement, including the royalty provision at issue in Quesnel,” according to the article.
“Apparently the plaintiffs are not renouncing their argument regarding the legality of applying royalties to revenues from the sale of medications,” Éric tells Lexpert. “But given the strong reasons in the thorough 37-page judgment, I’m wondering what will happen to the class action.”
For more information, read Julius Melnitzer and Sandra Rubin’s article “Top 10 decisions with cross-border impact” in the December 2017 digital edition of Lexpert Magazine.