Les Entreprises MTY Tiki Ming Inc. v. McDuff, J.E. 2008-2168

In February 2006, a franchisee suffering from a physical disability resulting from a car accident purchased a "La Crémière" franchise from the franchisor without discussing the terms and conditions of the agreement. Legal proceedings ensued and damages were awarded.

Before her accident, the franchisee was an experienced business woman who managed a business with 27 employees. In November 2005, she was informed by her psychiatrist that she would no longer be able to work as an owner, manager or director of a business because of her physical limitations. In February 2006, the franchisee came across an advertisement for a franchise and communicated with the franchisor. The "turn key" franchise agreement was signed by the parties on February 21, 2006. The franchisee did not attempt to negotiate any terms or conditions of the agreement. At trial, the franchisee argued that (1) the lay-out of the shop was not finished when it was delivered by the franchisor, (2) the delivery of the shop was late, and (3) the franchisee was not sufficiently trained to manage the franchise. In turn, the franchisor claimed that the franchisee was still indebted for the balance of the purchase price and that she had no reason to refuse payment of same.

In its Judgment, the Court noted that the franchisor was not required to question the medical condition of the franchisee before entering into the franchise agreement. It was the franchisee’s responsibility to find work which was well suited given her physical limitations. The Court also concluded that in this particular case, the franchise agreement was not a contract of adhesion. The franchisee should have inquired as to the scope of the franchise agreement and should have acted in a prudent and diligent manner when negotiating same with the franchisor. Furthermore, the Court noted that the franchisee did not act in good faith when she refused the assistance of training personal and refused to speak with the franchisor. As for the late delivery of the premises, the Court concluded that the delivery obligation is one of result. Consequently, the Court ordered the franchisor to pay damages to the franchisee in the amount of $25,000. However, the Court did not declare the franchise agreement terminated since the deficiencies were not significant. Thus, the Court ordered the franchisee to pay the balance of the purchase price.