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Interlocutory Injunctions in the Franchise Context

By Jennifer Dolman and Aislinn Reid
April 29, 2009

Injunctions play a key role in franchising. They enable franchisors to enforce in-term and post-term covenants contained in their franchising agreements to protect their brand, reputation, and franchise system generally. They also allow franchisees to enjoin franchisors from wrongfully terminating their franchise relationship.

When pending a trial wherein a franchisor seeks to enjoin a franchisee from breaching a restrictive covenant or a franchisee seeks to enjoin a franchisor from terminating their relationship, Canadian courts have generally applied the following three-part test (the “Test”): 1) Is there a serious issue to be tried?; 2) Will the moving party suffer irreparable harm if the injunction is not granted?; and 3) Does the balance of convenience lie in favor of granting the injunction? (The quintessential test for an interlocutory injunction is set out in R.J.R MacDonald Inc. v. Canada (A.G.), [1994] 1 S.C.R. 31 at pp. 334-343.) Where the facts satisfy the Test, Canadian courts have typically granted an injunction without paying too much attention to the merits.

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