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Full Case Name: 1518628 Ontario Inc. v. Tutor Time Learning Centres, LLC (2006)
This court decision is among the most influential Ontario court decisions under the Arthur Wishart Act (Franchise Disclosure), 2000, to date.
In this case, a Tutor Time Learning Centres day care facility was resold from the original franchisee to a new one. The franchisor required the spouse of the purchasing franchisee’s principal to sign the franchise agreement as guarantor.
The disclosure document appeared extensive and included all prescribed requirements, like financial statements, signed certificate, etc. However, it did not contain some important information about operational deficiencies that the day care had with the ministry.
After starting to operate the franchised day care, the new franchisee encountered problems and asked for the franchisor’s financial assistance. The franchisor agreed to provide financial assistance on condition of the franchisee sign a settlement agreement releasing the franchisor of any past claims. After consulting a transactional lawyer, the franchisee agreed and signed the settlement agreement and release.
Later, the franchisee started this case to cancel (rescind) its purchase of the franchise, and receive compensation for its losses. The Ontario Superior Court of Justice held as follows, for the first:
The decision was made by a senior judge of the Ontario court, sitting on the specialized Commercial List, Mr. Justice Cumming (now retired), a former law professor at Osgoode Hall Law School.
Procedurally, this was the first franchise rescission case where a court held important substantive issues under the Act without a trial – through a motion for summary judgment.
More importantly, the decision has played a pivotal role in shaping, and continuing to shape, these multitude fundamental aspects of Ontario franchise disclosure law:
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