The Quebec Court of Appeal’s April 15, 2015 decision is now the last word in a landmark case brought by 21 Dunkin’ Donuts Quebec franchisees against their franchisor, Dunkin’ Brands Canada Ltd. On March 17, 2016, the Supreme Court of Canada dismissed, without reasons, the franchisor’s application for leave to appeal the Quebec Court of Appeal decision. The Court of Appeal had affirmed the lower court’s decision, which found for the franchisees and allowed them to terminate their leases and franchise agreements, annulled their releases and awarded them a total of $16,407,143 in damages. The Court of Appeal did, however, allow the franchisor’s cross claims for $899,528 and $249,316 and reduced the global damages against the franchisor to $10,908,513.
While it can be argued that this case was decided on some atypical wording in the Dunkin’ Donuts franchise agreements, the Court’s extremely strong language regarding the implied obligations of franchisors in how they manage their systems, fend off competitors and deal with their franchisees, stands. Such language will no doubt be brought up in future Quebec franchise cases and may, one day, become part of the test regarding franchisor conduct. If that happens in Quebec, or even if it does not happen there, it may happen in the common law provinces in Canada based upon the Quebec Court’s analysis.
This article is published to inform clients and contacts of important developments in the field of franchise and distribution law. The content is informational only and does not constitute legal or professional advice. We encourage you to consult a Dickinson Wright attorney if you have specific questions or concerns relating to any of the topics covered here.