Leading Canadian
FRANCHISE & BUSINESS LAW FIRM

Sovereignty (Houston Stakes)

Full Case Name: Sovereignty Investment Holdings, Inc. v. 9127-6907 Quebec Inc. (2008)

This is an influential Ontario court decision under the Arthur Wishart Act (Franchise Disclosure), 2000, on the issue of what constitutes a materially deficient disclosure document.

The franchisee purchased a large restaurant in the Vaughan-Mills Shopping Centre that is located in Vaughan. The franchisor was a Quebec franchise startup.

About a year after purchasing the restaurant, the franchisee was forced to close it down as a result of mounting losses.

The disclosure document did not contain key required components under the Act. The franchisee brought a court action to cancel (rescind) the franchise purchase and receive compensation.

The court held for the first time that a disclosure document is inoperable and is not considered a “disclosure document” under the Act if it fails to contain any one of the following fundamental components: (i) a signed franchisor’s certificate, (ii) financial statements, (iii) if earning projections are included, the required supporting information about, and (iv) that the disclosure document contain all required information and documents in one document, delivered to a prospective franchisee at one time.

The decision was made by a senior judge of the Ontario court, sitting on the specialized Commercial List, Mr. Justice Wilton-Siegel.

This case has played a pivotal role in shaping some fundamental aspects of Ontario franchise disclosure law under the Act with respect to the main requirements of a disclosure document under the Act.

In addition, this was the first Ontario case that held a successor franchisor – a purchasing franchisor that acquired the rights to the franchise system from the original franchisor – was liable to a franchisee for the original franchisor’s rescission obligations.

Back

Franchise Law Blog

Ontario Court of Appeal Upholds...

Posted by | 29 September 2017

On July 4, 2017, the Court of Appeal for Ontario released a decision in Trillium Motor World Ltd. v. Read More

Franchise Renewals: Introducing...

Posted by | 15 August 2017

​This article, written by Ben Hanuka, was originally published by The Lawyers Daily on July 7, 2017, under the title “Courts struggle for balance with material changes to... Read More

Court of Appeal for Ontario Provides...

Posted by | 14 June 2017

Authors: Evan Ivkovic and Jeff Nguyen, Students-at-Law, Law Works P.C. Read More

View All

What’s New

Ben Hanuka gives expert commen...

We are pleased to announce that the Globe and Mail sought our firm’s expert opinion about the intensifying fight in the Tim Horton’s franchise. Read More

Law Works Welcomes New Articli...

We are pleased to announce that Rann Wang has joined Law Works P.C. as an articling student. Rann obtained his J.D. from Tulane University Law School in the U.S., and LL. Read More

​​Article in The Lawyers D...

We are pleased to announce that The Lawyers Daily published an article by Ben Hanuka on July 7, 2017, titled “Courts struggle for balance with material changes to renewal... Read More

View All

Request Information

Please Fill out this form to request information

*By filling out this form you agree to be contacted by Law Works to receive emails pertaining to requested information. You can unsubscribe at any time, simply contact us or reply "unsubscribe" to our emails.

Law Works Lawyers | 855-978-5293|tel:855-978-5293 | 80 Kincort Street, 2nd Floor, Toronto, ON M6M 5G1 | https://www.lawworks.ca

Please select the STAR and click the SUBMIT button

rolling
 Please wait...