At issue in 1323257 Ontario Ltd. v. Hyundai Auto Canada Corp. was the franchisor's notice to the franchisee that its dealer agreement would be terminated because of the franchisee’s failure to relocate its operations to a suitable site. The Ontario Superior Court of Justice found that the franchisee had established a strong case that the franchisor breached its statutory and common law duty of good faith by entering into discussions with a new franchisee to contract for the same site that had been suggested by the existing franchisee but rejected by the franchisor. The franchisee alleged that the franchisor breached its duty of good faith by misrepresenting (by omission) its intentions regarding the suggested site. The court granted the franchisee interlocutory injunctive relief, enjoining the franchisor from terminating the dealer agreement and authorizing the opening of the replacement dealership. This case illustrates that, depending on the evidence, when considering granting an injunction a court will regard an allegation that a franchisor has misrepresented material facts, whether actively or by omission, as a serious question to be tried and one that may give rise to a finding of bad faith.
