Case Summary
Tim Horton’s is one of Canada’s most well-known brands and operates quick serve restaurants under a franchise system. Franchisees operate Tim Hortons franchises pursuant to a franchise agreement with TDL. RBI is the parent corporation of TDL. In recent years, the Tim Hortons franchise system has been faced with mounting pressure caused indirectly or directly by TDL and RBI. As a result, some of the franchisees formed the Great White North Franchisee Association (GWNFA). Over 70% of the Tim Hortons franchisees became members of the GWNFA. The objects of the GWNFA include fostering and promoting the rights and interests of the franchisees, articulating and advocating for the needs, rights, and interests of the franchisees, and improving communication between franchisees and the franchisor.
The Association Action is based largely on the duties and rights of franchisors and franchisees established under the Arthur Wishart Act (AWA).
Specifically:
- Section 3 of the AWA establishes a duty of fair dealing between a franchisee and a franchisor which includes a duty to act in good faith in accordance with reasonable commercial standards;
- Section 3(2) of the AWA provides for a right of action damages against the party who breaches the duty of fair dealing.
- Section 4 of the AWA provides that a franchisee may associate with other franchisees and may form or join an association.
- Section 4(2) of the AWA provides that a franchisor shall not interfere with, prohibit, or restrict, by contract or otherwise, a franchisee from forming or joining an organization or from associating with other franchisees.
In essence, the Association Action claims that the Defendants have engaged in a pattern of conduct which constitutes a breach of the duty of fair dealing and interferes with the franchisees’ right to associate. For example, TDL falsely alleged that the board members of the GWNFA disclosed confidential information and sent notices of default to these members, refused to deal with GWNFA in an effort to frustrate the efforts of the association, intimidated and bullied franchisees who joined the GWNFA, publically labelled franchisees who are members of the GWNFA as disgruntled and rogue franchisees, denied future store opportunities to franchisees who are members of the GWNFA, and bought out franchisees who are members of the GWNFA.
Further details are set out in the Fresh as Amended Association Statement of Claim.