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Franchise Review April 2016

Apr 14, 2016

Osler’s Franchise Review contains legislative updates, commentaries on recent cases and practice tips as well as news on our team. In this edition, we take a closer look at  a number of important court cases with implications for franchisors, covering everything from duty of disclosure to perpetual franchise agreements.  We also look at the recent proposal to allow electronic disclosure in Ontario. 



What’s cooking? New Ontario menu labelling law
Christine Jackson, Nicole Kutlesa, Lindsay Rauccio 

Newly enacted Ontario Healthy Menu Choices Act, 2015 to come into force on January 1, 2017. The Act will have a significant impact on a number of food service providers, including fast food restaurants, convenience stores, grocery stores, bakeries and coffee shops as well as entertainment venues like movie theatres, amusement parks and bowling alleys. Food service providers and franchisors should take action now to review their systems and develop an action plan for compliance with the Act and the Regulations.


Legislative Update: Electronic delivery of disclosure documents coming to Ontario!
Dominic Mochrie, Paul Kotschorek

Want to email a disclosure document in Ontario? Soon you may be able to.

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Franchising in the courts

Chavdarova v. The Staffing Exchange: The accidental franchise
Andraya Frith, Christine Jackson

A recent decision of the Ontario Superior Court of Justice found that notwithstanding the terminology the parties have used to characterize the relationship, a relationship between two parties will be deemed to be a franchise where the relationship meets the conditions set out in the definition of the term “franchise” in the Arthur Wishart Act (Franchise Disclosure), 2000.


Does the duty of good faith guarantee franchisees a reasonable return?
Evan Thomas

A recent Ontario class action decision suggests that the duty to act in good faith and in accordance with reasonable commercial standards does not require franchisors to ensure franchisees earn a reasonable financial return.


The consequences of being a “rogue” franchisee
Gillian Scott, Paul Kotschorek

Franchisor rewarded in costs decision for protecting its system from rogue franchisees.


225603 Ontario Inc. v. Dakin News Systems Inc.: Extra! Extra! This just in!
Gillian Scott, Paul Kotschorek

Relying on disclosure exemptions? The Ontario Court of Appeal confirms you ought to think twice. . . 


Court of appeal dismisses Pet Valu franchisee class action and clarifies scope of duty of fair dealing
Gillian Scott, Jennifer Dolman, Evan Thomas, Stephanie Henry

Ontario Court of Appeal holds that a misrepresentation (or a failure to disclose material facts in a disclosure document) cannot amount to a breach of section 3 of the Wishart Act, the duty of fair dealing.


Restrictive covenants cannot prevent franchisees from operating in areas where the franchisor has no intention of operating
Jennifer Dolman, Rebecca Hall-McGuire

In MEDIchair LP v. DME Medequip Inc., 2016 ONCA 168, the Ontario Court of Appeal confirmed that restrictive covenants are not enforceable if they purport to apply outside the territory in which the franchisor intends to operate because, in such circumstances, the franchisor has no legitimate or proprietary interest to protect. In this case summary we review practical advice for franchisors looking to enforce restrictive covenants in light of the Ontario Court of Appeal’s decision.


Automatic renewal provisions and perpetuity
 Éric Préfontaine, François Laurin-Pratte

Evergreen franchise agreements appear to be alive and well according to the Québec Court of Appeal.


The use of shell corporations - When a franchisor’s shield becomes a third-party’s sword against the system’s franchisees
Julien Hynes-Gagné, Éric Préfontaine

Franchisors’ use of shell corporations may not provide them with the protection anticipated, and unless carefully drafted, may result in increased liability pursuant to the Québec Court of Appeal’s recent decision in 9183-7708 Québec Inc. v. Soltron Realty Inc.

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Best practices

Best practices: Including mediation and arbitration clauses in franchise agreements
Aislinn Reid, Jennifer Dolman

Whether to include a mediation clause and/or an arbitration clause in a franchise agreement requires careful consideration. We provide an overview of issues for franchisors to consider when determining whether to include mediation and arbitration clauses in their franchise agreements, and best practices to consider when drafting these clauses.

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Canadian Franchise Guide

On Oct 20, 2015, Osler announced the launch of the second edition of our Canadian Franchise Guide. The comprehensive guide offers more than 2,000 pages of practical content created by our internationally recognized franchise lawyers, and is co-edited by Andraya Frith, Dominic Mochrie and Gillian Scott. Chapters cover all of the economic, business and legal considerations franchise law practitioners need to know to advise and assist clients in today’s franchise market.

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  • Evan Thomas authored “Recent developments in Canadian franchise class actions,” Franchise Law Journal, Winter 2016 issue
  • Christine Jackson co-authored “Franchising Fundamentals: Your First Franchise Client,” Ontario Bar Association, February 2, 2016
  • Jennifer Dolman, Gillian Scott and Evan co-authored the Osler Update, Court of Appeal dismissed Pet Valu franchisee class action and clarifies scope of duty of fair dealing, January 18, 2016
  • Jennifer and Sonja Pavic co-authored the Osler Class Action Defence blog post, “2015 Theme #3: Franchise Law,” December 4, 2015
  • Jennifer co-authored the Who’s Who Legal’s “Franchise 2015: Roundtable,” October 2015
  • Christine Jackson co-authored “What’s on the menu? Regulations under menu labelling law clarify caloric posting requirements,” Toronto Law Journal, October 2015
  • Christine co-authored “What’s cooking? New Ontario menu labelling law to take effect in 2017,” Lexis Nexis Commercial Times and Ultimate Corporate Counsel Guide, Summer 2015
  • Jennifer co-authored the Osler Update, “Québec Court of Appeal Upholds Finding of Franchisor's Obligation to Maintain Brand Strength,” April 17, 2015
  • Jennifer and Alexandre Fallon co-authored “Dunkin Donuts decision has limited application outside Québec,” Canadian Lawyer Magazine, April 15, 2015
  • Dominic Mochrie co-authored the “Canada” chapter and edited the “Germany” and “Australia” chapters in the American Bar Association’s International Sales Laws

Speaking engagements


Canadian Franchise Association Annual Convention, Ottawa, Ontario, April 17 – 19, 2016

  • Christine will be facilitating a roundtable session, “Dealing with Franchisee Associations”
  • Evan will be presenting with Jean-Marc Leclerc on “Unique issues with master franchises”

IFA Legal Symposium, Washington, DC, May 15-17, 2016

  • Gillian will be moderating a panel discussion, “Winds of change – Tried techniques for effectively managing risk when implementing system-wide change”


Ontario Bar Association’s Franchise Law Section, Toronto, Ontario, April 6, 2016

  • Jennifer participated as a debater in The Great Renewal Debate

Canadian Restaurant Investment Summit, Toronto, Ontario, March 2, 2016

  • Jennifer was a member of the legal panel and spoke on “Social Media, and Crisis Management”

Ontario Bar Association’s 2016 Institute, Toronto, Ontario, February 2 – 6, 2016

  • Christine chaired and presented on “Franchising Fundamentals: Your First Franchise Client”

Canadian Franchise Association Law Day, Toronto, Ontario, January 28, 2016

  • Christine facilitated the roundtable session, “Customizing Disclosure Documents for Resales and Renewals”
  • Evan presented with Dan Vukovich on “Data Management in Franchise Systems”

Canadian Franchise Association, December 2015

  • Dominic presented the webinar, “Canada’s Anti-Spam Legislation: Where are we now?”

Ontario Bar Association’s Annual Franchise Law Conference, Toronto, Ontario, November 17, 2015

  • Dominic was a program co-chair
  • Gillian presented the workshop, “If, Why, When and How – A Practical Guide to Settling Franchise Disputes”

American Bar Association’s Forum on Franchising, New Orleans, Louisiana, October 14-16, 2015

  • Dominic co-presented a paper, “Mastering International Franchise Relationships”

Ontario Bar Association Summit, Toronto, Ontario, October 8, 2015

  • Dominic co-facilitated an industry summit, “Greater Certainty, Clarity and Efficiency in Franchise Legislation”

Ontario Bar Association June 2, 2015 Dinner Program

  • Andraya participated as a speaker on "How Dunkin’ Donuts and Other Recent Canadian Decisions Will Impact Your Practice"

International Franchise Association 2015 Legal Symposium, Chicago, Illinois, May 3-5, 2015

  • Dominic co-presented a paper, “International Franchising”

Ontario Business Law Stakeholder Panel, April 2015

  • Andraya made a presentation, advocating for changes to the Ontario franchise legislation, to create greater certainty in franchisers disclosure obligations. 


  • Christine was quoted in “Canadian food regulation: a growing area for legal services” by Julius Melnitzer, Lexpert Business of Law, November 30, 2015
  • Jennifer was quoted in “Relief for Franchisors" by John Greenwood, Lexpert Magazine, July/August 2015 edition
  • Jennifer was quoted in “The 12-year doughnut fight: Legal saga offers cautionary tale of pitfalls of franchisee-franchisor relationship" by Bertrand Marcotte, The Globe and MailReport on Business, June 29, 2015
  • Christine was quoted in “Ontario’s new menu labelling law to take effect in 2017” in Canadian Business Franchise Legal Corner, June 15, 2015
  • Christine was quoted in “Ontario’s new calorie display law to take effect in 2017” by Julius Melnitzer, Financial Post, Legal Post, June 1, 2015
  • Jennifer was quoted in “Québec ruling clarifies franchisors obligations" by Luis Millan, Lawyers Weekly, May 8, 2015
  • Jennifer was interviewed for and was quoted in “The Future of Franchising” by Julius Melnitzer, Lexpert Magazine, April 2016 edition


  • Chambers Canada: Canada's Leading Business Lawyers, 2016, Osler ranked in Band 1, Franchising
    • “The team is made up of strong litigators, mediators and lawyers with great commercial skills for reorganisations and acquisitions."
    • "A top-tier firm - they are very organised and give good advice."
  • Chambers Global: The World’s Leading Lawyers for Business, 2016, Osler ranked in Franchising
    • "They're very proactive and extremely thorough; I completely trust their judgement and advice."
    • "They're very good in terms of responding and offering practical advice."
  • The Best Lawyers in Canada, 2006-2016, Osler's Franchise Group is "top-listed" in Canada
    • Five lawyers listed in the 2016 edition of The Best Lawyers in Canada: Jennifer Dolman, Andraya Frith, Larry Lowenstein, Dominic Mochrie and Gillian Scott
    • Jennifer Dolman recognized as the “2016 Toronto Franchise Lawyer of the Year”
  • Franchise Times, 2011-2016, Osler lawyers are recognized as a “Legal Eagles.”
    • In April 2016, Jennifer Dolman, Dominic Mochrie and Gillian Scott were recognized as “Legal Eagles” by North American franchise peers in the Franchise Times’ annual review for their work in the franchise arena
  • The Canadian Legal Lexpert Directory, 2010-2015, Osler’s Franchise Group, “Most Frequently Recommended” (the highest possible ranking)
    • Six lawyers are ranked in the guide for Franchise Law, with two lawyers listed as “Most Frequently Recommended”: Jennifer Dolman and Andraya Frith
    • Lexpert listed: Jennifer Dolman, Colin Feasby, Andraya Frith, Dominic Mochrie, Larry Lowenstein and Gillian Scott
  • The Lexpert Guide to the Leading U.S./Canada Cross-Border Corporate Lawyers in Canada, 2013-2015, Osler lawyers recognized in the area of Franchising Law: Jennifer Dolman, Andraya Frith and Dominic Mochrie
  • Who’s Who Legal 100, 2014-2015, Osler lawyers recognized in the area of Franchise Law
    • Three Osler lawyers are listed in the franchise chapter of Who’s Who Legal: Franchise 2015: Jennifer Dolman, Andraya Frith and Dominic Mochrie
    • Jennifer Dolman is named in the category of “Most Highly Regarded Individuals in North America” and described as “Canada’s premier franchisor litigator” as well as “an incredibly skilled litigator and a superlative strategist.”
  • Who’s Who Legal: Canada 2015 lists Jennifer Dolman, Andraya Frith, Dominic Mochrie and Gillian Scott
    • Jennifer Dolman and Andraya Frith included in the list of the Top Ten “Most Highly Regarded Individuals”
    • “Osler Hoskin & Harcourt boasts four listings this year, and is led by Andraya Frith who chairs the firm’s national franchise and distribution practice group. She is ‘greatly respected’ for the role that she plays when advising retailers and foreign franchisers who are looking to expand their interests to Canada. Jennifer Dolman boasts a reputation among peers as a ‘litigation specialist,’ making her a ‘must for inclusion’ in this chapter. The firm is also represented by the ‘accomplished’ Dominic Mochrie, who is known for his work in distribution. Gillian Scott gains recognition for her ‘strong expertise’ in privacy law and shareholder disputes.” 

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