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Franchise - Damages - General. Raibex Canada Ltd. v. ASWR Franchising Corp.
In Raibex Canada Ltd. v. ASWR Franchising Corp. (Ont CA, 2018) the Ontario Court of Appeal allowed an appeal by a franchisor, this brought against motion judge's decisions which "held that the franchise agreement had been validly rescinded and dismissed the Franchisor’s claim for damages".
Here the court allows the appellant-franchisor's claim for (apparently) common law damages:Issue 2 – Remedies Available to the Franchisor
[67] Based on the above analysis, I conclude that the Franchisee was not entitled to rescind the franchise agreement. The only remaining question relevant to this issue concerns the Franchisor’s remedy.
[68] The Franchisor claims $230,221.45 in damages – $119,859.66 for the deposit required under the head lease, and $110,361.79 in unpaid construction invoices. The Franchisor paid these amounts on behalf of the Franchisee and seeks reimbursement.
[69] In oral argument, the Franchisee submitted that any damages awarded to the Franchisor should not include amounts paid to cover the head lease deposit. The Franchisee notes that the deposit allowed the Franchisor to assume control of – and derive benefits from – the ASWR outlet after receiving the Franchisee’s notice of termination.
[70] In my view, the Franchisor is entitled to damages arising out of the Franchisee’s failure to fulfill its financial obligations under the franchise agreement. That said, I agree in principle with the Franchisee that these damages should account for the financial benefits the Franchisor derived from operating the franchise outlet. The record before this court does not disclose the extent of those benefits. If the parties are unable to agree on the amount, the quantification of the Franchisor’s damages should be remitted to the Superior Court, to be determined as follows. The Franchisor is entitled to $110,361.79 as compensation for the amount it was forced to pay due to the Franchisee’s unpaid construction invoices. The Franchisor is also entitled to $119,859.66 on account of the head lease deposit, less any financial benefits it derived from operating the franchise outlet for the duration of the lease.
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