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Franchise Disputes in Canada: The Case for Mediation and Arbitration

Canada enjoys a robust and growing franchising environment. According to the Canadian Franchise Association (www.cfa.ca/Publications_Research/Fastfacts.aspx), franchise businesses account for 40% of all retail sales in Canada. More than 78,000 franchise units across Canada directly employ more than one million people. Commensurate with growth, franchise-specific legislation has now been enacted in five provinces in Canada (in order of enactment, Alberta, Ontario, Prince Edward Island, New Brunswick and Manitoba). In addition, franchising is generally regulated in Quebec under that province's Civil Code, in which franchise agreements are considered to be contracts of adhesion.

With the introduction into Ontario of class action legislation in 1992 under the Class Proceedings Act, franchise disputes common to a distinguishable group of all or substantially all the franchisees within a specific franchise system have become the subject matter of very large and significant class actions. Companies with such prominent names as Petro Canada, Bulk Barn, A&P, Midas, Quiznos, Tim Hortons, Sears, Suncor, Pet Valu, and Shoppers Drug Mart, and even the Ontario government, have been or are currently involved in franchise class actions.

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