Ontario Court Of Appeal Upholds Lower Court Decision To Certify Employment Class Proceeding Involving Franchise System Delivery Drivers

In the 2025 case of Cervantes v Pizza Nova Take Out Ltd., the Ontario Superior Court of Justice granted certification of a proposed class proceeding against both a franchisor and its franchisees in respect of employment law claims made by independent contractor pizza delivery drivers. Both parties to that decision appealed certain aspects of the reasons to the Ontario Court of Appeal. In deciding the appeal, the Court of Appeal upheld the majority of the lower court’s findings on the certification decision with the exception of one issue, as the Court overturned the certification of a conspiracy claim amongst all of the franchisees. This decision provides further guidance on potential claims that may be faced by franchisors and franchisees in respect of the employment rights claims brought by parties that have been traditionally classified as independent contractors.

A copy of our discussion of the lower court decision can be found here. The Court of Appeal’s decision can be found here.

The franchisor, Pizza Nova, did not appeal the decision to certify the class action against it. Rather, Pizza Nova focused on the scope of the certification against its franchisees. The plaintiff driver cross appealed to increase that scope.

The Plaintiff’s Appeal

The plaintiff focused on two alleged errors: (a) the motion judge’s decision that the franchisees were not “common employers” for the purposes of employment law claims under the Ontario Employment Standards Act (the ESA), and (b) the motion judge’s refusal to certify non-conspiracy-related claims against all franchisees instead of just the four franchisees the driver worked for.

A. The Common Employer Issue

The plaintiff took the aggressive position that all of the franchisees were “common employers” of delivery drivers under the ESA, meaning that “every franchisee would be liable for the ESA obligations of every other franchisee.” This position was rejected by the motions judge and the Court of Appeal similarly disagreed with it. The Court reviewed the relationship between franchisees and rejected the argument outright:

“The motion judge based his decision on the alleged facts before him. He found that each Franchisee had a business relationship with the Franchisor, not with the other Franchisees. He found that the only possible association or relationship between the Franchisees was that they each decided to enter into a business relationship with the Franchisor. The relationship with the Franchisor did not create a common employer relationship as between the Franchisees. Leaving aside the possibility that one Franchisee might own multiple franchises, the motion judge found that the individual Franchisees operated their own independent businesses and had independent relationships with the Franchisor, not with each other.”

Showing an appreciation of the nature of franchising, the Court commented: “The role of a franchisor under its agreement with a franchisee may result in a finding that it is managing the franchisee, but not that one franchisee has a role managing another franchisee….The Plaintiff relies on a common customer base, yet, subject to geographic differences, these Franchisees are competitors.”

B. The Non-Conspiracy Related Claims

The plaintiff took the position that since the motions judge found a cause of action in conspiracy between all of the defendants (the franchisor and all of the franchisees), that would be sufficient to certify all of the claims against the defendants. The Court declined to address this ground of appeal because it overturned the certification of a cause of action in conspiracy against all of the Defendants.

The Defendants’ Appeal

The defendants focused on three errors in their appeal: (a) the motions judge’s decision to certify a conspiracy claim against all of the defendants (the franchisor and all of the franchisees); (b) the decision that the issue of the status of each driver as either an employer or independent contractors should be a common issue; and (c) the certification of a negligence claim against the defendants.

C. The Conspiracy Claim Fails

The defendants argued that the motions judge erred by holding that all of the defendants (including the franchisees) conspired together and with each other “to deprive [drivers] of their [statutory employment benefits].” They pointed out that this claim was inconsistent with the rest of the pleading, whereby the plaintiff claimed that the franchisor, not the franchisees, retained extensive control over the terms and conditions of the drivers.

The Court of Appeal agreed with this argument, holding that “[a]t best, the claim, read as a whole, shows that the Franchisees each acquiesced to the Franchisor’s requirements regarding drivers. Acquiescence is insufficient for a conspiracy.” In rejecting the conspiracy claim, the Court stated:

“It is plain and obvious that the Plaintiff is relying on the relationship as determined by the Franchisor in its requirements about drivers, which it is pled that the Franchisor controlled, not on any other conduct to conspire including the Franchisees. The motion judge erred in certifying the claimed conspiracy between all of the Defendants as if they all agreed to commit an unlawful act with one another.”

D. Employment Classification and The Negligence Claim

The Court of Appeal upheld the motions judge in respect of the decision to have the status of drivers decided as a common issue. The Court noted that there was mixed jurisprudence on the issue, and that no palpable or overriding error was shown. Moreover, the Court noted that status issues can be identified in the judgment at the common issues trial. The Court similarly upheld the certification of the negligence claim, citing the motions judge’s finding that, “[a] delivery driver searching for low paid shift work may not have the same ability to regulate their affairs in a contract such that a negligence claim would be precluded.”

Takeaways

The narrow nature of the parties’ appeals meant that the Court was able to focus on fine-tuning the issues at play in the class proceeding. The Court helpfully struck the system-wide conspiracy claim, holding that the plaintiff cannot claim extensive franchisor control of franchisees to bootstrap one part of its claim while similarly pleading that all franchisees were equal partners in a conspiracy. Similarly, the Court acknowledged the commercial absurdity of the claim that all franchisees were common employers of each other’s delivery drivers. This decision will hopefully lead to more precisely drafted claims by class counsel rather than scattershot attempts to broaden the scope of employment class proceedings to all participants in franchise systems.

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