UTGB Vol 5.pdf - Robson Hall Faculty of Law

This decision is of particular importance in that it distinguishes ]ima Ltd. v.
Mister Donut of Canada Ltd., 96 a landmark Supreme Court of Canada ruling
stating that the franchise relationship does not give rise to fiduciary duties. The
current state of the common law is that a franchisor may be a fiduciary but only
where the facts so warrant.
iii.P.E.I.
Prince Edward Island boasts the newest franchise legislation in Canada, with
the Franchises Act 97 coming into force on 1 July 2006. Like the Ontario Act and
Alberta Act, the P.E.I. Act has enacted relationship provisions enforcing the
duty of fair dealing and the right of franchisees to associate and organize. 98 P.EJ.
has followed Ontario's fair dealing provisions closely. However, s 3 (1) of the
P.E.L Act extends the duty of fair dealing by adding "including the exercise of a
right under the agreement." Regardless of any differences, for all provinces, the
duty of fair dealing is a mutual obligation between franchisors and franchisees,
whereas the right to associate is designated to protect the interests of
franchisees. 99 Furthermore, P.E.I. struck the phrase 11 in the performance or
enforcement of the franchise agreement" from Ontario's right of action section
under fair dealing, so that the section reads:
A party to the franchise agreement has a right of action for damages against another
party to the franchise agreement who breaches the duty of fair dealing. 100
In contrast to the procedure followed in enacting fair dealing provisions, P.E.I.
adopted Ontarids association provision verbatim.
iv. New Brunswick
The Provincial Legislature of the Province of New Brunswick proposed Bill32,
entitled the Franchises Act, at a first reading on 23 February 2007. If passed, the
Bill will impose a duty of good faith and fair dealing on franchisors and
franchisees. The legislation will also protect the right of franchisees to
associate. 101 Although New Brunswick altered the order, it followed P.E.I.'s fair
dealing provision, extending the performance and enforcement of the franchise
96
[1975] 1S.C.R. 2.
97
R.S.P.E.I. 1988, Cap. F14.1.
98
Lawrence Weinberg & Jayne Westlake, "Canada's East Coast Provinces Pursue Interest in
Franchise Law," online: Franchise UPDATE Archive, Past Articles .
99
Ibid.
100
R.S.P.E.I. 1988, Cap. F l4.1, s. 3(2).
101
Richard Leblanc, "New Brunswick Reintroduces Franchise Legislation," FranNews (Spring
2007), online: Miller Thomson LLP, Publications, Newsletters at 1.