In a motion for partial summary judgment heard on June 22, 2010, the Plaintiffs (franchisees) submitted inter alia that they did not receive a valid disclosure document in accordance with section 5 of the Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000 (the “Act”), that they validly rescinded the franchise agreements with the Defendants (franchisors) pursuant to section 6(2) of the Act and in turn that they were entitled to the statutory compensation as provided by the Act. The Defendants denied that a valid disclosure document was not provided to the Plaintiffs. In addition or in the alternative, the Defendants argued that the matter involved a resale of an existing franchise by an existing franchisee and since the Defendants were at arms length to the transaction, they ought to be exempt from providing a valid disclosure document. Further, the Defendants argued that if there was a burden of disclosure, that burden should have been met by the existing franchisee seller.
After reviewing the submissions, Justice Wilson ruled that the purported disclosure document was deficient in several regards, the onus of providing a disclosure document must be borne by the franchisors pursuant to the Act and that the franchise agreements were validly rescinded by the Plaintiffs in accordance to the Act.
In granting partial summary judgment, Justice Wilson ordered that the Defendants were indeed liable to the Plaintiffs for the statutory amounts provided by section 6(6) of the Act.
Citation: 2189205 Ontario Inc. et al. v. Springdale Pizza Depot Ltd. et al.
http://www.canlii.org/en/on/onsc/doc/2010/2010onsc3695/2010onsc3695.pdf
Arthur Wishart Act (Franchise Disclosure), 2000, S.O. 2000
http://www.canlii.org/en/on/laws/stat/so-2000-c-3/latest/so-2000-c-3.html
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