With my pardons for the pun, the title is meant to describe the essence of a Marilyn Monroe brand license arrangement which had no operational control of a restaurant system named after Monroe: it was a pure “hands off” arrangement.

Authentic Brands Group LLC, a US brand management company, licensed through the Estate of Marilyn Monroe, the right to set up and operate Marilyn Monroe-themed restaurants.

The license was granted to MGDC Management Group Inc. and an affiliate.  The arrangement was based on this one agreement.  No similar arrangement was given to anyone else.

MGDC and its affiliates claimed that their arrangement with Authentic Brands Group LLC was itself a “franchise agreement” under Ontario’s Arthur Wishart Act (Franchise Disclosure), 2000, and that they were entitled to a rescission (cancellation) of the arrangement because they had not been provided with a franchise disclosure document.

In a short decision released on August 7, 2014, in the case of MGDC Management Group v. Marilyn Monroe Estate, the Ontario Superior Court of Justice ruled that the Act did not apply to the relationship and that the agreement was not a franchise agreement within the Act.

The key reasons for the ruling were an exception in section 2(3) of the Act with respect to a single license arrangement, and the lack of any operational control.

In addition to the statutory exception of a single license arrangement, the court found that there was no franchise relationship because there was no operational control of the restaurant system by the licensor.

There was no evidence of any control of how the licensee designed the system or operated its business.  The licensor had no involvement in the setup or operation of the restaurants – it was merely licensing use of the name, subject to typical minimal quality controls to which a trademark owner is entitled.  MGDC and its affiliate were required to develop all aspects of the restaurant operations, including looks, quality of products, training their own franchisees, and operating the system.

As a result, the court application by MGDC and its affiliates for rescission and damages was dismissed.

This article is provided for information purposes only. Law Works’ Franchise Law Blog does not provide legal advice.

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