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When it s not better late than never with franchisee claims

(1) the Quebec Superior Court revisited certain franchising principles and reaffirmed the leading principles of Dunkin Brands Canada Ltd v Bertico inc(2) concerning the duties of franchisors, while holding both franchisor and franchisee responsible for their respective actions and negligence that led to the downfall of their relationship. While it is well established that even in Quebec, where no formal franchise legislation has been enacted, franchisees are viewed as vulnerable parties and are often afforded additional protections to their franchisor counterparts, this decision highlights the importance of exercising franchisee claims in a timely manner and the dangers of tacit acceptance of franchisors misrepresentations. It also confirms that the court will not ignore the requirement that franchisees establish a causal link between the franchisor s defaults and misrepresentations and the franchisee s damages simply because franchisees are viewed as vulnerable parties.

Cold cut for franchisees! Supreme Court of Canada denies designated supplier s duty of care for pure economic loss

In its recent five-to-four split decision in 1688782 Ontario Inc v Maple Leaf Foods Inc,(1) the Supreme Court of Canada dismissed the proposed class action brought by Mr Sub franchisees against Maple Leaf Foods for damages resulting from a listeria outbreak linked to Maple Leaf cold cuts. By ruling in favour of the supplier, the majority of the court found that no duty of care is owed by an exclusive supplier for purely economic losses suffered by franchisees with which the supplier has no direct contractual relationship. While the court confirmed that the supplier owed a duty of care to the franchisees customers, who fortunately did not suffer any harm from the recalled products, it stopped short of finding that the supplier owed a duty of care to the franchisees given the lack of proximity between them and the fact that the damages were limited to pure economic losses due to reputational harm and an interruption in supply.

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