Here's an interesting article by Rebecca Hamovitch of Canadian lawyers, Cassels Brock, about a case (Butera et al. v. Mitsubishi Motors et al.) on 31 August in which the Ontario Superior Court of Justice granted a motion for summary judgment brought the defendants and dismissed the action brought by the plaintiffs. The Court held that the dealer agreement in this case did not give rise to a franchise relationship, so the Arthur Wishart Act (Franchise Disclosure), 2000 did not apply.
The long title of the Act (if that's the correct name for the statement of what it's all about in Canada) describes this piece of legislation as:
The story is that in 2002, Butera submitted an application to acquire a Mitsubishi dealership. He included sales forecasts which he based on figures from the United States and the defendants' predictions of expanded sales in both the United States and Canada (in the case of Canada, expanded from nothing, as Mitsubishi cars were not being sold there at the time). Those predictions later formed the basis of the claim, which alleged misrepresentation, breach of collateral warranty and failure to comply with the Arthur Wishart Act.
The judge threw out the claim and allowed the defendants' counterclaim. There was no evidence that the figures of sales in the United States were not accurate, nor was there any evidence to suggest that the defendants' agents did not honestly believe their predictions of success. So there was no misrepresentation. The facts that there was an entire agreement clause in the dealer agreement, and the dealer was himself a lawyer, also appear to have been persuasive. As for the Act, because the dealer was not required to pay the manufacturer the agreement fell outside the definition of "franchise". Even if that were wrong, the Act would not be any help to the dealer because it largely codified the common law, on the basis of which the plaintiff's claims had already been thrown out.
We still use the word "franchise" rather loosely over here. There isn't the same degree of statutory protection for franchisees in the EU as there is in Canada, so there's little to be gained by trying to argue that a dealer agreement is in fact a franchise, but the likelihood is that it would be doomed to failure ... When it comes to trying to extend dealer protection in the EU, the commercial agents directive is a much more promising starting point.
The long title of the Act (if that's the correct name for the statement of what it's all about in Canada) describes this piece of legislation as:
"An Act to require fair dealing between parties to franchise agreements, to ensure that franchisees have the right to associate and to impose disclosure obligations on franchisors."What an extraordinary idea! Imagine interfering with the free operation of market forces like that. It would give the European Commission palpitations.
The story is that in 2002, Butera submitted an application to acquire a Mitsubishi dealership. He included sales forecasts which he based on figures from the United States and the defendants' predictions of expanded sales in both the United States and Canada (in the case of Canada, expanded from nothing, as Mitsubishi cars were not being sold there at the time). Those predictions later formed the basis of the claim, which alleged misrepresentation, breach of collateral warranty and failure to comply with the Arthur Wishart Act.
The judge threw out the claim and allowed the defendants' counterclaim. There was no evidence that the figures of sales in the United States were not accurate, nor was there any evidence to suggest that the defendants' agents did not honestly believe their predictions of success. So there was no misrepresentation. The facts that there was an entire agreement clause in the dealer agreement, and the dealer was himself a lawyer, also appear to have been persuasive. As for the Act, because the dealer was not required to pay the manufacturer the agreement fell outside the definition of "franchise". Even if that were wrong, the Act would not be any help to the dealer because it largely codified the common law, on the basis of which the plaintiff's claims had already been thrown out.
We still use the word "franchise" rather loosely over here. There isn't the same degree of statutory protection for franchisees in the EU as there is in Canada, so there's little to be gained by trying to argue that a dealer agreement is in fact a franchise, but the likelihood is that it would be doomed to failure ... When it comes to trying to extend dealer protection in the EU, the commercial agents directive is a much more promising starting point.
