Reaffirming The Right To Release: New Vision Renaissance MX Ltd. v. The Symposium Café

The recent decision in New Vision Renaissance MX Ltd. v. The Symposium Café Inc. 1, ("New Vision") broadens the scope of franchisors' ability to obtain binding releases from franchisees.

Further, New Vision provides a helpful interpretation of the Court of Appeal's decision in Raibex Canada Ltd. v ASWR Franchising Corp.2 In dismissing the franchisee plaintiff's claims for statutory rescission under the Arthur Wishart Act (Franchise Disclosure), 2000 (the "AWA"), the Court held that "piecemeal disclosure" will no longer constitute a fatal deficiency in and of itself; instead, following Raibex, the Court clarified that the fundamental inquiry is whether the franchisee was deprived of the opportunity to make an informed investment decision.

The Facts

In New Vision, the franchisee acquired a franchise in the Symposium Café restaurant and lounge system under an original franchise agreement made as of February 2015 (the "Franchise Agreement"), and a franchise amending agreement made as of June 2015 (the "Franchise Amending Agreement"). Prior to closing, the franchisee advised representatives of the franchisor that there would be a delay in advancing funds on the scheduled closing date. The franchisor then agreed to provide a short-term loan to the franchisee to facilitate a timely closing which was memorialized in the Franchise Amending Agreement.

The loan was advanced on a condition that the franchisee sign a release. The language of the release was broad, and included releasing the franchisor for any claims for rescission for failing to provide disclosure as required by the AWA.

Ontario's AWA, at section 11, provides a general prohibition against a waiver of statutory rights by a franchisee.

Shortly after opening, the franchisee brought an action for rescission under the Act due to alleged disclosure deficiencies, and argued that the franchisor was prohibited from relying on the release pursuant to section 11.

The franchisor argued the release was valid and enforceable under the judicially developed exception to section 11 known as the "Tutor Time" exception, derived from the decision on 1518628 Ontario Inc. v. Tutor Time Learning Centres, LLC.3

Under the Tutor Time exception, a valid release must meet three criteria. It must:

be given in settlement of a dispute, release only known breaches; and be given with the benefit of legal advice. The Decision

The motion proceeded by way of summary judgment, with the issues of liability and damages...