OCA considers limitation period under s. 6(2) of the Arthur Wishart Act in respect of a Replacement Franchise Agreement

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The Ontario Court of Appeal’s decision in 2212886 Ontario Inc. v. Obsidian Group Inc.2018 ONCA 670, concerned an appeal from a partial summary judgment involving a franchise dispute. Section 6(2) of the Arthur Wishart Act (Franchise Disclosure), 2000, provides that a franchisee may rescind a franchise agreement no later than two years after entering into the franchise agreement if the franchisor failed to provide the disclosure document. One of the two principal issues respecting liability was whether the two year limitation period ran from the date the parties executed the franchise agreement (in which case they would be out of time), or from the date the parties executed a replacement agreement (in which case the claim was timely).

The motions judge concluded that it was the replacement agreement that should be considered. He reasoned that since the franchisor required the franchisee to sign that replacement agreement, he could no longer rely on the first agreement. The Court of Appeal agreed with the motions judge on the basis that since it was an undisputed request from the franchisor, there was nothing to suggest that there was any benefit to the franchisee to resign an agreement. Accordingly, the franchisor could not now argue that it was the original agreement that should be upheld.​