The full text of the judgment of the Honorable Justice Daniel H. Tingley in its original version.pdf
MONTREAL, June 25, 2012 /CNW Telbec/ - After a legal proceeding that
lasted nine years, the Superior Court of Québec's Justice Daniel H.
Tingley ordered Dunkin' Brands Canada Ltd. to pay plaintiffs $16.4
million in damages plus legal interest and expert witness costs.
In his ruling, Justice Tingley found in favour of Dunkin' Donuts' former
franchisees, which were suing the franchisor for incompetence,
negligence, lack of support and assistance, as well as flagrant breach
of the contract entered into between the franchisor and its
franchisees, notably to protect and enhance the brand between 1995 and
Justice Tingley stressed that:
"(40) It is a sad saga as well of how a once successful franchise
operation, a leader in its field — the donut/coffee fast food market in
Quebec — fell precipitously from grace in less than a decade;
literally, a case study of how industry leaders can become followers in
free market economies"
"(57) But the greatest failing of all was ADRIC's failure to protect its
brand in the Quebec market. No doubt the host of failings chronicled by
the Franchisees contributed to the collapse of the Dunkin' Donuts'
brand in Quebec. A successful brand is crucial to the maintenance of
healthy franchises. However, when the brand falls out of bed,
collapses, so too do those who rely upon it. And this is precisely what
has happened in this case."
"(58) ADRIC has assigned to itself the principal obligation of
protecting and enhancing its brand. It failed to do so, thereby
breaching the most important obligation it had assumed in its
contracts. It must accept the consequences of such a failure. As noted
above, Franchisees cannot succeed where the system has failed. After
sustaining several years of stagnant sales, narrowing profit margins
and then losses, the Franchisees have all had to close their stores.
Their losses follow hard upon the heels of ADRIC's failures as night
"(61) Were the Franchisees poor operators? Not by a long shot. They were
amongst the best and most successful in the Quebec "réseau". Their
owners were amongst the most active committee members. Several of them
chaired these committees at one time or another. Many of the owners
operated several stores. They were for the most part the leaders
amongst the Quebec Franchisees. ADRIC failed miserably during the first
sixty-six days of trial to paint the Franchisees as poor operators.
This was a defence utterly devoid of substance."
According to Mtre Frédéric Gilbert (Fasken Martineau), who represented the franchisees
with the collaboration of Mtre Guy de Blois (Langlois Kronström Desjardins), acting as legal advisor,
the Tingley judgment will have major repercussions on how franchisees
are protected and how franchisors' responsibilities are defined.
"Justice Tingley has issued a rigorous judgment that has all the makings
of a leading case on franchising in Canada. This decision will become a
reference tool for setting the basic guidelines governing contractual
relations between parties," stated Mtre Gilbert.
Mtre Gilbert believes that the determination and solidarity of the group of
franchisees suing Dunkin' Brands played a key role in this legal
action. "These people courageously overcame the many negative
repercussions of what has been a very long saga. They valiantly
confronted the countless financial and human pressures that are often
seen in battles pitting David against Goliath. Even at their weakest
moment they never gave up the fight, which is all to their credit."
PDF available at: http://stream1.newswire.ca/media/2012/06/25/20120625_C3950_DOC_EN_15661.pdf
SOURCE FASKEN MARTINEAU
For further information:
Fréchette & Girard communication-conseil
514 279-2526, cell. 514 926-5827
Mtre Frédéric Gilbert
514 397-5232, cell: 514 262-0930