In Quizno’s Canada Restaurant Corporation et al. v. 1450987 Ontario Corp., the Ontario Superior Court of Justice granted an injunction sought by a sandwich restaurant franchisor against three franchisees. The franchisees were forced to cease operating their franchises and prevented from operating similar businesses within contractually prescribed limits.
The franchisor had terminated the franchisees due to the following contractual breaches by the franchisees: 1) selling under-portioned sandwiches to customers; 2) failing to participate in promotions; and 3) failing to provide a delivery service as directed by the franchisor. The franchisees argued that the terminations were tactical attempts by the franchisor to retaliate against the franchisees over a class action brought by the franchisees against the franchisor. The franchisees also sought a competing injunction restraining the franchisor's terminations.
The court held that the franchisor had a strong prima facie case concerning the terminations and that it would suffer irreparable harm to its franchise system if its injunction were not granted. The court compared the two injunction requests and determined that the balance of convenience favoured the franchisor. In granting the franchisor's injunction and denying the franchisees’, the court commented, “[t]he dispute in this case is not a localized dispute. It is about the franchisor's management rights across the chain of franchises, and this circumstance influences the calculus of irreparable harm and the balance of convenience.”