This meant that the franchisor was not in a position to prevent its former franchisee from coming to the same area. (Although the former franchisee was prevented from poaching employees and customers because these clauses were enforceable.) The Tribunal considered and rejected a number of other arguments put forward by the applicants. In particular, the Tribunal upheld the appeal judge`s finding that the franchisor was not required to provide the applicants with a disclosure document pursuant to Sections 5(1) and 4 of the Arthur Wishart Act (Disclosure Franchise), 2000, S.O. 2000, about 3, when the applicants purchased the 2008 franchise. In this case, the franchisor participated only on the sidelines in the granting of the franchise – it authorized the transfer of the franchise to the applicants, accepted a replacement sum and received personal commitments from the various applicants related to the 2005 franchise agreement. As a result, the franchisor was exempt from the statutory advertising obligations. Section 5, paragraph 8, of the proposed B.C. Franchise Act provides the same exceptions to advertising obligations when a franchisee awards a franchisee. RCs in franchise agreements must be carefully developed and regularly monitored by an experienced lawyer to ensure their applicability and avoid any loss of unintended protection.
Restrictive alliances are not only triggered by layoffs, but also by expiry periods. They apply regardless of whether the franchisee was liable at any time during the franchise term. The examination that is not applied by the courts to judge the validity of an alliance to the existence of an alliance is whether the prohibition is “proportionate” in time and materially. The courts give franchisors so much leeway in the development of these clauses that in the absence of a clause prohibiting competition “everywhere in the United States for 20 years,” the clause will be deemed appropriate. On behalf of our client, we have contributed to the interpretation of the franchise agreement. Then we got the restrictive alliance. We also received an injunction that prevented the franchisee from damaging our client`s brand and value.