Topic 7 – Franchise Law, Agency Law, and Employment Law

Who are the two parties in a franchise relationship?

Franchisor and franchisee.

What is the nature of the franchise relationship?

Contractual, with a duty of good faith.

What are the key parts of a franchise agreement?

Fees/royalties, conduct rules, termination terms, restrictive covenants, IP rights.

What legislation governs franchises in Ontario?

The Arthur Wishart Act.

What are the franchisee’s key rights under the Act?

Right to disclosure, fair dealing, and right to associate.

What is the employment relationship based on?

A contract giving the employer control over the employee’s work.

What are the two main types of employment contracts?

Continuous service and fixed term.

What are the employer’s potential sources of governing law?

Statute (ESA), collective agreements, and common law.

What is vicarious liability in employment?

Employer is liable for employee’s actions done in the course of employment.

What are the employee’s three main duties?

Obey, exercise skill/care, and act in good faith/fidelity.

What are the employer’s two main duties?

Pay wages/benefits and provide a safe environment.

What determines if someone is an employee or independent contractor?

Control, tools, chance of profit/risk of loss, integration, intention, payment method, exclusivity, benefits access.

What are the three sources of termination notice requirements?

ESA minimums, employment contract terms, and common law (Bardal factors).

What is “with cause” dismissal?

Firing without notice due to conduct that breaches the employment contract.

What is “without cause” dismissal?

Employer can terminate but must provide notice or payment in lieu.

What is condonation?

Employer ignores misconduct too long → cannot fire for that behaviour later.

What is constructive dismissal?

Employer makes a major unilateral change → treated as wrongful dismissal

What is mitigation in wrongful dismissal?

Employee must try to find comparable work to reduce damages.

What is reinstatement?

Employee gets job back; rare and usually only available by statute.

What legislation provides employee rights/benefits?

Human rights laws, ESA, OHSA, Labour Codes, EI Act, WSIB.

Who are the three parties in agency?

Principal, agent, and third party.

What is actual authority?

Authority truly given by the principal (express or implied).

What is apparent authority?

Principal’s conduct leads the third party to reasonably believe the agent has authority.

What is the indoor management rule?

Third parties may assume internal corporate processes were followed.

What is the result when an agent has no authority?

Agent is bound, not the principal.

What is ratification?

Principal later adopts a contract made without authority.

What are the agent’s three key duties?

Follow the agreement, exercise care/skill, act in fiduciary good faith.

What are the principal’s two key duties?

Pay remuneration and reimburse expenses.

What is the liability rule for torts in agency?

Principal is liable for agent’s torts within real or apparent authority.

What is the warranty of authority?

If someone claims to be an agent but is not, they can be sued for pretending to have authority.

What are the main ways to terminate an agency relationship?

Expiry of time, completion of task, notice, death/insanity, bankruptcy, or impossibility.