Toronto Franchise Litigation
Franchises are increasingly becoming a way for entrepreneurs to manage and grow their own business with the security of an established brand and business model. Whether you are a seasoned business-owner, or a recent immigrant making a new start, franchises hold significant potential.
However, they also hold significant risk, due to the substantial start-up costs and with no guarantee of financial success.
The relationship between a franchisor and a franchisee is an imbalanced one, where franchisors often impose “take it or leave it” terms and maintain significant control over the operation of your business and your bottom line.
Arthur Wishart Act
For these reasons, the Ontario government introduced comprehensive legislation, known as the Arthur WIshart Act, designed to ensure that potential franchisees are properly informed about the franchise system they are entering, and to provide protections and remedies when franchisors engage in misrepresentation or operate in a way that is unfair to their franchisees. These protections are in addition to the common law protections that are applicable in all business transactions.
At Gilbertson Davis LLP, our team has considerable experience representing franchisees who are facing problems with their business due to the actions or misrepresentations of franchisors.
One of the most powerful remedies available to franchisees is, where a required Disclosure Document is incomplete or not provided, the franchisee may rescind the franchise agreement – that is, attempt to put the parties into the situation they were in before the contract was created. The Arthur Wishart Act provides that, when a franchise agreement is validly rescinded, the franchisor must:
(a) refund to the franchisee any money received from or on behalf of the franchisee, other than money for inventory, supplies or equipment;
(b) purchase from the franchisee any inventory that the franchisee had purchased pursuant to the franchise agreement and remaining at the effective date of rescission, at a price equal to the purchase price paid by the franchisee;
(c) purchase from the franchisee any supplies and equipment that the franchisee had purchased pursuant to the franchise agreement, at a price equal to the purchase price paid by the franchisee; and
(d) compensate the franchisee for any losses that the franchisee incurred in acquiring, setting up and operating the franchise, less the amounts set out in clauses (a) to (c)
Protecting Your Rights as a Franchisee
We can advise and represent clients in wide-ranging matters and disputes including:
- Whether the Arthur Wishart Act applies – that is, whether the relationship is a franchise and whether the Act has application by the business being wholly or partially in Ontario.
- The obligation on the franchisor to provide a prospective franchisee with a Disclosure Document.
- Whether the Disclosure Document complies with the Act.
- The duties of franchisees and franchisors under the Act of fair dealing, good faith and acting in accordance with reasonable commercial standards.
- Remedies and time limits to pursue those remedies, including for rescission of the franchise agreement and damages.
- The enforceability of non-competition and non-solicitation provisions of a franchise agreement
- Remedies and time limits to pursue remedies for:
- Providing an Incomplete Disclosure Document
- Failure to provide a Disclosure Document
- Breach of Fair Dealing Obligation
- Post termination or rescission competition and solicitation.
Why Choose Gilbertson Davis LLP
We strive to resolve our client’s disputes early and effectively through the provision of quality legal services at reasonable rates. Gilbertson Davis LLP has experienced litigators both in the courtroom and in arbitration. Gilbertson Davis LLP has lawyers who have experience in franchise matters in the Ontario Superior Court of Justice, the Divisional Court, the Ontario Court of Appeal and in arbitration.
We are a firm which has more than 30 years of practice in Toronto. We are ethical, professional and practical.
If you have franchising, distribution or licensing issues, please contact Gilbertson Davis LLP to arrange an initial consultation.
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