UTGB Vol 5.pdf - Robson Hall Faculty of Law

agreement was that disputes should be submitted to the dispute resolution
process. 158 This is a clear example of the necessity to disclose what, if any, ADR
methods will be pursued.
In Ellis v. Subway Franchise Systems of Canada Ltd., 159 the franchise agreement
contained a clause stating that any claim arising out of the agreement would be
settled by arbitration in accordance with American Arbitration Association
rules at a hearing in Connecticut. After the franchisee failed to cure alleged
defaults, the franchisor filed a demand for arbitration. The franchisee brought
an application for stay of proceedings on the grounds that the arbitration clause
in the Franchise Agreement was unenforceable on the basis that it was
unconscionable. The court, finding no evidence of fraud, duress or inequality of
bargaining power, upheld the clause and arbitration proceeded. Had the
franchisee not been difficult, the dispute could have been resolved promptly
and economically.
ii. New Brunswick
A unique feature of New Erunswick's proposed Franchises Act, Bill 32, is the
ability of one party to a franchise agreement to deliver a notice to the other
party requiring that a dispute be mediated. Although the proposed legislation
permits one party to a franchise agreement to require that the other party to
enter into mediation, the proposed legislation confirms that this procedure does
not preclude either party from taking other steps in relation to the dispute. 160
Bill 32 thus allows any party to a franchise agreement who has a dispute with
the other party to deliver a notice of dispute setting out the nature of the
dispute and its desired outcome. The parties must then attempt to resolve the
dispute within 15 days after delivery of the notice of dispute. If the parties fail to
resolve the issue, any party to the dispute may then deliver a notice to mediate
within 30 days after delivery of the notice of dispute but not before the expiry of
the 15 days for resolving the dispute. Section 8(6) of the bill addresses the issue
of confidentiality by stating that no person shall disclose or be compelled to
disclose in any proceeding before a court, tribunal or arbitrator any information
acquired, any opinion disclosed or any document, offer or admission made in
anticipation of, during or in connection with the mediation of a dispute under
this section. Section 8(7) restricts 8(6) by stating that no confidentiality will
apply to anything that the parties agree in writing may be disclosed, an
agreement to mediate, a document respecting the cost of mediation, a
158
Zaid, supra note 67 at 339.
159
(2000), B.L.R. (3d) 55.
160
Blaire Rebane, Karen Carteri & James M. Bond, 11 Recent Developments in Franchise Law,"
(Paper presented to the Western Franchise Summit, 2007) online: Lang Michener LLP
Publications, Articles at 4. -