Bruno Floriani spoke to Canadian Lawyer regarding a recent ruling of the Supreme Court of Canada concerning franchise law.
In the case of Modern Concept d’entretien inc. v. Comité paritaire de l’entretien d’édifices publics de la région de Québec, the majority found that Francis Bourque, who had entered a franchise agreement with a cleaning company, was an employee and not an independent contractor. He was therefore entitled to wages and other benefits when he terminated his franchise agreement in 2014.
The Court found that the franchisor, Modern Concept Cleaning, remained contractually liable to the clients by reason of the imperfect assignment of the cleaning contracts to its franchisee and assumed the business risk associated with such contract which became tripartite as a result of the imperfect assignment. This notion of ongoing contractual liability for performance and management of the business risks convinced the majority to accept the Comité Paritaire’s claim that Mr. Bourque should be considered an employee under the relevant act rather than a franchisee.
Bruno Floriani explains that this franchise agreement structure is not typical in Canada, except in certain specific industries. However, he calls for more vigilance from franchisors as to the extent of controls imposed in respect of the franchisee’s performance of their contracts, particularly in circumstances where the franchisors continue to manage the relationship with the clients of the franchisees.
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