Did DQC Canada Inc. (Respondent) breach the duty of fair dealing and good faith under Section 3 of the Arthur Wishart (Franchise Disclosure) Act (Wishart Act)?
If yes, what is the appropriate remedy?
Facts:
Ken Breau Corporation (Applicant), a Dairy Queen (DQ) franchisee, alleged that DQC breached its statutory duty by planning a new restaurant close to the Applicant’s territory.
The Applicant operates three DQ Treat stores in Brantford, Ontario, with a fourth site approved but not constructed.
The franchise agreement, originating in 1954, defines the Applicant’s exclusive territory as Brantford’s 1954 city limits plus five miles.
Key Legal Points:
Exclusive Territory: The court confirmed the 1954 boundaries as the Applicant's territory. The site for the proposed DQ Grill & Chill fell outside this area.
Good Faith: The court found no breach of the duty of good faith. DQC:
Provided reasonable notice about the new site.
Acted within its contractual rights under the franchise agreement.
8-km Buffer Zone: The court rejected the Applicant's claim that DQC must maintain an 8-km buffer zone around its territory, citing no contractual or policy basis.
Outcome:
Application Dismissed: The court held that DQC did not breach its obligations under the Wishart Act.
Costs: The Applicant was ordered to pay DQC $35,000 in partial indemnity costs.
