The Danger of a Promissory Note in the Purchase of Franchise
Osler, a leading Canadian law firm, has an article on a recent case mine, entitled "Does the Arthur Wishart Act Change the Law of Set-off in Ontario?"
"This case could also potentially change the manner in which franchisors must allocate funds received from franchisees to various categories of debt.
Additionally, while not mentioned in the decision, the plaintiffs can be expected to raise the issue of whether the two-year rescission period had expired, as the note was dated July 31, 2002 and the notice of rescission delivered on August 13, 2004."
The Osler case brief unfortunately misses the key facts, and the grounds upon which the Judge denied summary judgment on promissory note.
Tupperware purported to revoke the franchise, and then calculated how much good will was owing according to a formula.
The good will was then allocated to the trade debt and not the promissory note.
The argument was that Tupperware never explained to the Court, for almost 3 years, why they set-off of the good will payment against the trade debt rather than the promissory note.
The legal issue in question was whether the promissory note had been paid - since a franchisor owes a duty of good faith in the performance of the contract to the franchisee.
That statutory duty might have required them to pay off the promissory note with the proceeds from the good will payment.
But there was no evidence before the Court about how and why Tupperware exercised their discretion.
No evidence - no summary judgment.
Tupperware has sought leave to appeal, will keep you posted.
Read More From BizOp News
April 24, 2008
Canadian House of Cards Continues to Fall
According to the the FTC,
Canadian House of Cards Continues to Fall, as Bogus Biller Settles FTC Charges: "Ex-wife of Ringleader Was One of Only Two Remaining Defendants in Case"
"The Federal Trade Commission today announced the issuance of a stipulated final court order against Emma G. Wanjiku, a Kenyan citizen and Canadian resident who participated in a wide-ranging scheme to trick U.S. consumers into paying for bogus business and travel directory advertisements and listings, office supplies, and consulting services they never authorized, ordered, or received.Under the terms of the order, Wanjiku, the ex-wife of the now-jailed ringleader of the Canadian defendants, has been barred from making the claims alleged in the Commission's complaint and is subject to a $4 million judgment that will become due if she is found to have misrepresented her financial condition.
The Commission previously settled similar charges against another individual and corporate defendant in the case, with the court imposing similarly strong injunctive and monetary relief.
(Via Federal Trade Commission (FTC) - Consumer Protection Press Releases.)
Hmm, one more case in which the FTC will chalk up a win for consumers, but there is actually no money recovered.
" The order also requires her to cooperate with the FTC in its ongoing case against her ex-husband and contains standard monitoring and record keeping provisions to ensure her compliance with its terms.Finally, while Wanjiku lacks the funds to provide for consumer redress, the order contains a $4 million judgment against her that would become due if she is found to have misrepresented her financial condition.
The order settles the FTC's case against Wanjiku, one of the final defendants in this matter.
The last defendant, Wanjiku's ex-husband, Michael Robert Petreikis, was arrested by the Toronto Police Service in August 2006 and pleaded guilty to Canadian criminal charges.
Petreikis was recently released from jail in Canada and is currently incarcerated in the United States for violation of an earlier probation order.
The FTC's litigation against him continues."
