License to use “Marilyn Monroe” Trade-mark is not a Franchise Agreement

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.Civil Litigation, Commercial, Commercial Law, Commercial Litigation, Contract Disputes, Franchise Law0 Comments

In MGDC Management Group Inc. v. Marilyn Monroe Estate, 2014 ONSC 4584, the Respondents and Applicants were parties to a License Agreement which granted to the Applicants the exclusive right to use the trademark “Marilyn Monroe” in its restaurants.  The Applicants sought rescission of the License Agreement by claiming that the License Agreement qualifed as a franchise agreement which entitled it to receive full disclosure under the Arthur Wishart Act (Franchise Disclosure), 2000 (the “Act”).  The Respondents moved to dismiss the Application.

Justice Morgan of the Ontario Superior Court of Justice found that the Act did not apply to the License Agreement for the following reasons:

  • The parties expressly agreed that franchise disclosure laws such as the Act did not apply to the License Agreement.  And, in fact, the principal of the Applicants acknowledged that she was aware of this provision when she signed the License Agreement.
  • Section 2(3)5 of the Act stated that it does not apply to a single trade-mark licensing agreement.  The License Agreement granted a non-transferrable, non-assignable, non-divisible right and license to use the trade-mark “Marilyn Monroe” in the Applicants’ Marilyn Monroe-themed restaurants.  It was the only license of its kind in the world.
  • The License Agreement did not exhibit the hallmarks of a franchise agreement such as significant control or assistance by the franchisor in the operation of the business.  The Court found that the Respondents were not responsible for, nor did it assist in the design, promotion and operation of the restaurant.
  • A forum selection and choice of law clause in the License Agreement provided that any dispute between the parties is to be resolved in State of New York under New York law.

Justice Morgan dismissed the Application, and awarded costs in the amount of $55,500 to the Respondents.

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About the Author
Nick P. Poon, B.Sc. (Hons.), B.A., J.D.

Nick P. Poon, B.Sc. (Hons.), B.A., J.D.

Practitioner in Civil Litigation with a focus in insurance defence and commercial litigation. Bio | Contact

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