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Quiznos (Site Selection Class Action)

Full Case Name: Al-Harazi v. Quizno’s Canada Restaurant Corporation (2007)

This was the first Ontario class action based on the disclosure requirements in the Arthur Wishart Act (Franchise Disclosure), 2000.

The class was comprised of about 200 franchisees. Each of them entered into a franchise agreement with Quiznos for a franchised restaurant in Ontario.

None of the approximately 200 franchise agreements resulted in the selection of a restaurant location and construction of a franchised restaurant.

After signing the franchise agreement, each franchisee waited for Quiznos to finalize details about the lease and construction requirements of the location.

The class action sought a refund of the franchise fee on behalf of all 200 class members. Quiznos took the position that, based on the terms the franchise agreement, franchisees were required to finalize leases for their stores on their own.

The class action was framed as a franchise disclosure claim under the Act, rather than as a breach of contract case under the terms of the franchise agreement. The action claimed that Quiznos failed to disclose to franchisees all material information about the leasing and site selection process.

In 2007, the case was settled after an extensive and complex multi-day mediation with a senior judge, at the time Regional Senior Justice Winkler, who later went on to become Chief Justice of Ontario (now retired).

As a class action, the settlement required court approval. After an extensive court hearing, including hearing from various class members, another senior Ontario court judge, Mr. Justice Cullity (now retired), approved the settlement.

The case was extensively covered in the media across Canada, and even in the U.S.

The case had a significant impact in the franchise industry by highlighting to franchisors and their professional advisors the importance of streamlining the site-selection process – both logistically and in the legal disclosure process.

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