Uniprix Inc. v. Bergeron, EYB 2008-128865

Uniprix claimed that the sale of certain pharmacies should be annulled because the franchisees had failed to act in good faith when they agreed to a competitor’s (Pharmaprix’s) offer to purchase the pharmacies and when they refused to give Uniprix a delay to exercise its right of first refusal.

The franchisees owned four pharmacies which they operated in accordance with the franchise agreement. The franchise agreement stated that the franchisor had a right of first refusal for three of the four pharmacies. Because they were planning to reduce their commercial operations, the franchisees offered to sell the pharmacies in May 2007. The franchisees gave a third party the mandate to sell the pharmacies and the same day, they informed the franchisor of their intentions. On June 26, 2007, Pharmaprix submitted four offers which expired on July 3, 2007 at 5:00 pm. After lengthy negotiations, Uniprix submitted an offer to purchase for one of the four pharmacies on July 3, 2007, and requested to delay the sale of the other three. On July 5, 2007, Pharmaprix bonified its offer in order to purchase the four pharmacies and the franchisees subsequently accepted the offer on July 6, 2007. The franchisor argued that the sale of one of the pharmacies was null and void because it was not given sufficient time to exercise its right of first refusal.

The franchise agreement provided that, in the event that the franchisees wished to sell the pharmacies, they had to first offer them to the franchisor. The Court agreed that this pre-emptive right constituted a restriction to freely dispose of the franchisees’ property but it was nevertheless reasonable and in accordance with the parties’ contractual freedom. The Court based its conclusions on Articles 7, 1375 and 2805 of the Civil Code of Quebec and noted that the franchisees did not act in bad faith. The Court found no collusion between the franchisees and Pharmaprix. During the negotiation process, the franchisees disclosed identical information to the franchisor and Pharmaprix regarding the sale of the pharmacies. Neither Pharmaprix nor the franchisees had any intent to harm the franchisor, or to impede upon its right to exercise its right of first refusal. The Court consequently dismissed the permanent injunctive relief sought by the franchisor.