Country Style (Sirianni)

Full Case Name: Sirianni v. Country Style (2012)

This is an influential Ontario court decision under the Arthur Wishart Act (Franchise Disclosure), 2000, on the issue of bad faith conduct. It is the first Ontario decision dealing with franchise disclosure and rescission rights that are intertwined with a franchisor’s bad-faith conduct in a prolonged renewal process.

The franchisees renewed the franchise agreement, unaware that the landlord and Country Style were involved in a significant dispute about the renewal of the head lease, and that Country Style had agreed with the landlord to terminate the lease.

The franchisor, Country Style, concealed from the franchisee the fact that the lease of the restaurant would not be renewed. The franchisee discovered this fact only in the course of the litigation process.

After hearing a full trial, the court held for the first time that failure to disclose material facts may also, in an extreme case such as here, constitute bad faith conduct. This entitled the franchisee to not only damages for losses, but also for rare punitive damages.

The decision was made by Madam Justice Mesbur, an experienced commercial judge on the specialized Commercial List. In 2013, the Court of Appeal for Ontario dismissed Country Style’s appeal of the trial decision.

The case is influential in how lawyers and the courts analyze bad faith conduct in an ongoing relationship between a franchisor and franchisee.