Underneath the Golden Boy - Robson Hall Faculty of Law

Response to Consultation Paper on Franchise Law 297
franchises. Moreover, she pointed out a series of factors in support of franchise
legislation. First, franchisees usually have virtually no experience with
franchising, so that legislative protection is needed. Second, there are no laws in
Manitoba to guarantee the safety and security of franchisees’ funds against fraud
and illegal actions on the part of the franchiser. Third, if Alberta, possessing a
government that is not known for its progressive legislation that supports and
protects individuals, already has an Act in place, it is evidence that Manitoba is
far behind. 7 She concluded her speech with the following remark:
I…urge government members to join us in supporting Bill 18, which is a very fine,
necessary, important and certainly overdue piece of legislation. 8
Regardless of the fate endured by Bill 18, it is important to note that these
three MLAs recognized the need for franchise legislation in 1992 and, 15 years
later, nothing has been done to fix the problem. The situation in Manitoba has
not improved since 1992, as evidenced in the following cases.
In John Deere Ltd. v. G.A.E.L. Inc., 9 the manufacturer, John Deere Ltd.
(“Deere”), improperly terminated a dealership agreement. Although the
Manitoba Court of Queen’s Bench found that Deere had every right to
terminate the agreement, the court found that Deere had done so with undue
haste and unreasonably. Changing the locks on the dealership to prevent the
dealer from re-entering the premises was not “reasonable termination.” Had
franchise legislation been in place, G.A.E.L. could have had protection against
Deere under a good faith and fair dealing provision.
A recent example of a franchisor abusing his power to subdue a franchisee is
Halligan v. Liberty Tax Service Inc. 10 The franchisor in this case unilaterally
withdrew funding from the franchisee’s store without notice and caused an
immediate drop in the franchisee’s revenue after the franchisee refused to use a
particular name. In one instance, Liberty did not provide software that would
work. Following Halligan’s complaints, a replacement was mailed to him, even
though his franchise location was in the same building as Liberty’s head office.
The court further describes Liberty as harassing Halligan even in the face of an
injunction granted in 2001. The Manitoba Court of Queen’s Bench provides a
more detailed description of Liberty’s action in its 2006 judgment of the same
case. The Court described Liberty’s conduct as malicious, high handed, and
7
Manitoba, Legislative Assembly, House Debates (Hansard), Vol. 82 (9 June 1992), (Hon.
Denis Rocan); Legislative Assembly of Manitoba, 3rd Session of 35th Legislature: Tuesday June
9, 1992, online: Hansard .
8
Ibid.
9
[1994] CarswellMan 323, 96 Man. R. (2d) 106.
10
[2003] MBQB 174, 36 B.L.R. (3d) 75, 176 Man. R. (2d) 57.