UTGB Vol 5.pdf - Robson Hall Faculty of Law

itter experience for all concerned. 88 Consequently, legislative provisions are
necessary to ensure the preservation of this delicate relationship.
Until the year 2000, when Ontario introduced the Arthur Wishart Act
(Franchise Disclosure), 2000, Alberta was the only Canadian jurisdiction to have
regulated the franchise relationship. However, because the population in
Alberta represents less than 10 percent of the total Canadian population, the
franchise relationship throughout Canada was governed primarily by common
law. 89 Since the year 2000, the introduction of franchise legislation in Ontario,
P.E.I. and possibly New Brunswick has increased the statutory protection of the
franchise relationship.
1. Current Legislation, Bill32 and the VFA
i.Alberta
Alberta first introduced franchise relationship proviSlons in 1995, when it
replaced the old Franchises Act. 90 The new Act adopted two relationship
provisions, addressing the duty of fair dealing and the franchisee's right to
associate. Section 7 of the Act states that every franchise agreement imposes on
each party a duty of fair dealing in its performance and enforcement. Section
8(1) of the Act states that a franchisor or its associate must not prohibit or
restrict a franchisee from forming an organization of franchisees or from
associating with other franchisees in any organization of franchisees.
Furthermore, a franchisor or its associate must not directly or indirectly penalize
a franchisee for associating with others.
The common law continues to play an important role in presiding over
franchise relationships. In Thompson v. Cinnaroll Bakeries Ltd., 91 the defendant,
who held an exclusive franchise for Cinnabon bakeries in Western Canada,
allowed the agreement to expire and opened up a new store at its own cost. The
plaintiff franchisor claimed breach of contract by the defendant for failing to
renew the agreement. The Alberta Court of Queen's Bench decided that,
according to the franchise agreement, the defendant would be bound to renew
should the renewal be offered on the same terms as before. Where reasonable
changes are proposed, it would be unreasonable for the defendant to refuse to
renew the agreement. However, since the defendant was not acting
unreasonably by refusing to renew due to significant changes introduced by the
franchisor, there was no breach of contract.
88 Edward N. Levitt, "The Franchisor/Franchisee Relationship,', online: Gowlings Resource
Centre < http://www.gowlings.com/resources/publications.asppubid =1134>.
89
Allan D.J. Dick & Markus Cohen, "The Duty of Good Faith and Fair Dealing in Canada,"
(Fall2004) 24:2 Franchise Law Journal 89 at 89.
90
R.S.A. 1980, Ch. F17 (repealed).
91
[2002] A.B.Q.B. 1112.