Canada: Post Dunkin In Quebec: What We Have Seen

Franchisors should take note of potential novel allegations being brought against them since the Quebec Court of Appeal's ruling in Dunkin' Brands Canada Ltd. v. Bertico Inc., 2015 QCCA 624 ("Dunkin")1.

Dunkin reiterated the law's willingness to read certain obligations into franchise agreements based on the duty of good faith and obligations which flow from the general nature of franchise agreements. Franchisors and franchisees alike have been left to speculate where the limits of their respective obligations and rights lie in the face of a legal landscape in flux.

Since Dunkin, two actions of note have been filed which levy relatively novel allegations against franchisors [in Quebec]. In Franchisés v. Groupe Qualinet ("Qualinet"), Plaintiffs are asking the court to recognize novel implied obligations including, amongst others, the duty to provide training. More recently, in Sopropharm v. Jean Coutu ("Jean Coutu"), the court is being asked to annul franchise agreements because they violate the professional obligations of its franchisees. Although both cases are still before the court, they bring forth a number of new allegations which franchisors should be alive to in their ongoing relations with franchisees.

(a) Jean Coutu: franchise agreements versus professional obligations?

The action brought in Jean Coutu involves the tension between the professional obligations imposed on franchisees by law against those outlined in franchise agreements. The Petitioner Sopropharm (a non-for profit association of pharmacists) filed a putative class action on behalf of all pharmacists operating Jean Coutu franchises on July 15, 2016. The Petitioner alleges that the franchise agreements are null on the basis that they require pharmacists to violate their professional obligations under the Code of ethics of Pharmacists and the Pharmacy Act. The Petitioner asks the court to both set aside the franchise agreements and effect restitution in excess of $250 million. The court's decision as to which set of obligations, contractual or professional, should prevail will undoubtedly have a serious impact on franchises operating in the professional domain. The Petitioner alleges the franchise agreement violates pharmacists' professional obligations in two ways:

(i) Illegal sharing of profits and fees

The Petitioner claims that Jean Coutu's franchise agreement requires pharmacists to share their profits and fees illegally with Jean Coutu. Jean Coutu's franchise agreement requires that franchisees pay Jean Coutu a royalty based on a percentage of their annual sales. However, the Petitioner contends that article 49 of the Code of ethics of Pharmacists (the "Code") only permits pharmacists to share their profits in proportion to the consideration (of services from Jean Coutu) they receive in exchange. The Petitioner also points to explicit provisions of the franchise agreement which state that it will be exercised in accordance with the Professional obligations of pharmacists, specifically citing obligations under the Code. The Petitioner thus claims that the franchise agreements violate both the implicit and explicit obligation to respect the professional obligations of pharmacist, and must therefore be set aside.

In the event the franchise agreements are set aside, the Petitioner asks the court to effect the restitution of the amount of royalties paid out in excess of fair market value of services provided by Jean Coutu. The Petitioner has alleged that this amount, limited to the past three years, is in excess of $250 million.

(ii) Violation of the exclusive property rights of pharmacists

Another contention of the Petitioner is that the franchise agreement violates pharmacists' exclusive right to own a pharmacy and liberally dispose of it. Jean Coutu's franchise agreement stipulates that pharmacists may not sell, alienate, transfer, mortgage or sublet their pharmacies without the express permission of Jean Coutu. Furthermore, any permission to sell a pharmacy is conditional on the granting of a full release to Jean Coutu. The Petitioner contends that this is direct violation of article 27 of the Pharmacy Act states that only a pharmacist may own a pharmacy. The Petitioner has asked, should it fail to find in its favour regarding violation article 49 of the Code (above), that the court annul all provisions of the Jean Coutu's franchise agreements which interfere with the exclusive property rights of pharmacists, enshrined at article 27 of the Pharmacy Act.

(b) Qualinet: novel implied obligations of franchisors?

On March 21, 2016 a number of franchisees (dry cleaners and disaster cleaners), filed a Motion to Institute Proceedings ("MIP") against Groupe Qualinet and its president ("Defendant") for damages in excess of $26 million. In addition to claiming the violation of the obligation "not to compete unfairly" and to "protect and enhance its brand" previously recognized in Dunkin, the Plaintiffs ask the court to recognize the existence of the following implied obligations, and their subsequent violation:

(i) Obligation to provide training

  • The Plaintiffs allege that training provided by the defendant was "unorganized, makeshift in nature, and insufficient."
  • Although the contract did state that the Plaintiffs would be provided training, it did not contain any specifics with regards to its type, frequency or duration.

(ii) Obligation to provide meaningful and sustained consultations

  • The Plaintiffs allege that annual meetings held between them and the Plaintiff were not consultative in nature, but rather were used by the Plaintiff to sell its products and promote its services.
  • The Plaintiffs allege that, despite numerous attempts, the Defendant refused to hear their grievances and actively prevented plaintiffs from discussing them with each other.

(iii) Obligation to provide support and assistance

  • The Plaintiffs called for help in reaching their sales projections as forecasted by the Defendant.
  • The Defendant failed to take any steps to aid the Plaintiffs, and moreover blamed the Plaintiffs behaviour for having failed to reach the projections.

We will be sure to monitor these cases and provide updates


1 On March 17, 2016, the Supreme Court of Canada dismissed the Dunkin' Brands Canada Ltd.'s application for leave to appeal from the judgment rendered by the Québec Court of Appeal.

To view original article, please click here.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.