Fact Scenario: Jim Jorton's Ltd. (Jimmy's) is a Franchisor of a fast-food franchise chain in Ontario. It has 30 locations across Ontario specializing in the sale of donuts, coffee and fast food.

Its Barrie, Ontario territory has a Franchisee, "Barrie Jimmy's," which is approaching the deadline date for its 10 year renewal for its franchise agreement with Jimmy's. If Barrie Jimmy's Franchise Agreement isn't renewed, the Franchisor, Jimmy's, could under the Franchise Agreement take control and possession of the location since the lease is with the Franchisor, Jimmy's and the agreement gives it the authority to take control in the event of non-renewal.

The Franchisor, Jimmy's, has been negotiating franchise renewals with its other locations. The Franchisee fee is 10% for royalties on gross sales, although some Jimmy's locations have been signed with renewals at a lower royalty rate. For example, a different franchisee, "Sudbury Jimmy's" renewed its Franchisee Agreement for 15 years at 6% royalty fee to the Franchisor, Jimmy's.

The signing fee for a renewal is usually $35,000 but Sudbury Jimmy's and other locations have signed for less at $20,000.

Barrie Jimmy's is one of the few successful locations, which may explain why it was charged more for its renewal fees and royalties.

The owner of the Barrie Jimmy's meets with the CEO of Jimmy's, Mark Matlow, who says he wants to renew the franchise agreement with Barrie Jimmy's "on the same terms as its other locations" at the standard rate of 10% royalties.

Matlow and Jim Jorton's fails to disclose material facts to Barrie Jimmy's prior to Barrie Jimmy's signing of the Franchise Renewal Agreement, including a lawsuit from a creditor, Hedgehog Hedge Funds, where Jimmy's owes $5 million that the creditor seeks to collect on its debt. After Barrie Jimmy signs its franchise renewal agreement, it learns about Sudbury Jimmy's discounted franchise royalty rates and lower fees upon franchise agreement renewal as well as the lawsuit by the creditor.

The CEO of Barrie Jimmy's, Jen Kwon, has hired you to conduct legal research. Jen thinks that Jimmy's has acted dishonestly and wants you to create a paper analyzing her problem. Jen wants you to discuss her concerns by connecting your analysis to good faith in contracts and franchise agreements.

She would like you to determine whether there are any remedies available to her in the current contract and Franchise law regime and if not, how would you suggest changing Ontario Franchise and Canadian contract law to account for the necessary changes? In addition to the law of good faith in contracts, Jen also wants you to look at the Ontario Arthur Wishart Act which governs franchises in Ontario to see if it helps Barrie Jimmy's.

Instructions

A thesis and supporting arguments are necessary to show your analysis. Your analysis ought to examine expectations of contract law in the current regulatory regime, as defined by Franchise legislation, provincial or federal regulators, if applicable, and court decisions. Try to show a legal test, rules, or principles that a court is likely to use when assessing the client's problem. Legislation, common law, and scholarly discussions must go beyond a simple description or overview.

Elaborate your analysis by considering the grounds and potential challenges that your client might face in court. Your argumentation and research skills depend on how well you substantiate and communicate your argument. You must not limit your paper to a summary or description of the law. A foundational part of your essay depends on your ability to find the right sources necessary to discuss the client's case with rigor and support your thesis statement.

Papers that restate facts and statements from other sources are summaries that will receive a low or failing grade. You must develop your own analysis throughout the paper. You are being assessed on your argumentation skills and research ability and how well you substantiate and communicate your argument.

Given the fact pattern, choose an essay title. You should narrow your topic to something precise. By focusing your analysis, you have a better chance of elaborating a well-defined argument and avoiding summaries. Where possible, try to discuss your topic's implications or relevancy.

In the discussion of your research paper, consider the following questions:

What is the problem? What issues are involved?

What are the relevant issues and why are they important in Contract and Franchise Law?

What is your solution to the client's problem? Page 3 of 4 Make sure you include the following:

A debate or overview of the legal issue;

An explicit thesis statement;

Critical analysis and justified arguments;

Integrates concrete law, principles and examples in your analysis and arguments;

Identifies statutes, cases, or legal principles to address the issues raised in the paper;

Explained the various cases, statutes and/ or text principles involved.

Formatting, citations and sources

All research papers must reference a minimum of two cases (Canadian sources), and two journal articles not already used in class. Research papers must reference at least two cases and two journal articles not used in class. You need to adopt the McGill Guide to Legal Citation guidelines. Make sure that you include footnote references in your assignment. You will find the citation guide here: . Your essay must rely on law journal articles, legal texts, statute, and case law sources. You may not use newspaper or other types of academic literature (i.e. business scholarship) and mark deductions will occur for unacceptable references.

Sources include the Department of Justice website, CanLII, peer-reviewed journals or books, Ryerson Library, and Quicklaw. Sources include the Department of Justice website, CanLII, peer-reviewed journals or books, Ryerson Library, and Quicklaw.

Outline:

Introduction

Thesis statement and supporting arguments/proofs

Problem in law

Your idea/solution/argument

Explanation and discussion of supporting arguments Page

Up to two paragraphs per supporting argument

Describe how the law should be understood to support your arguments

one paragraph with a potential counter argument and response

Conclusion

USE INFORMATION BELOW AS A GUIDE:

Introduction

The Franchise Agreement between Barrie Jimmy's and Jim Jorton's Ltd. (Jimmy's) is being examined closely because of possible instances of deceptive and prejudiced behaviour by Jimmy's. This paper contends that such treatment could potentially breach principles of good faith, misrepresentation, and the Arthur Wishart Act (Franchise Disclosure), 2000 (Ontario), which may result in the agreement being unenforceable. By analyzing the lawsuit that has been kept secret against Jimmy's, the unfair treatment given to Barrie Jimmy's, and the possibly unfair terms in the agreement, we will investigate the legal options available to Barrie Jimmy's to contest the validity of the contract renewal. Additionally, we will emphasize the necessity for stronger safeguards for franchisees in Ontario.

Thesis Statement

The Franchise Renewal Agreement between Barrie Jimmy's and Jim Jorton's Ltd. (Jimmy's) is potentially unenforceable as a result of Jimmy's misleading and discriminatory treatment, which may constitute violations of good faith, misrepresentation, and the Arthur Wishart Act (Franchise Disclosure), 2000 (Ontario).

Supporting Argument #1

Canadian contract law acknowledges the obligation of good faith in both the creation and execution of contracts. This obligation necessitates that all parties behave in a manner that is truthful, equitable, and demonstrates a reasonable level of caution towards one another. For further information, please refer to the Reasons for Judgment in the case ofBhasin v Hrynewich: [https://www.canlii.org/en/ca/scc/doc/2014/2014scc71/2014scc71.html]. Here, Jimmy's may have violated this obligation by:

• Withholding Material Facts: Non-disclosure of the lawsuit filed by Hedgehog Hedge Funds could have a substantial impact on Barrie Jimmy's risk evaluation and his readiness to renew at a higher interest rate. This is consistent with the concept set forth in the case ofHonda Canada Inc. v Keay, in which the Supreme Court of Canada highlighted the significance of disclosing all relevant information.
• Unequal Treatment: Providing Barrie Jimmy's with a renewal package that is less advantageous than what other franchises receive, without providing a valid reason, raises questions about fairness and has the potential to create economic pressure. The case ofTercon Contractors Ltd. v. Claybank Enterprises Ltd. exemplifies the need for fairness and reasonableness in the creation of contracts, indicating that such imbalanced treatment can be subject to legal dispute.

Supporting Argument #2

Arthur Wishart Act (Franchise Disclosure), 2000 (Ontario): The purpose of this legislation is to regulate the release of franchise information in Ontario and provide safeguards for franchisees. Barrie Jimmy may be eligible for relief under the Act if:

• Non-Disclosure of Material Facts: Franchisors are obligated by the Act to provide a disclosure statement that includes important information [Refer to Arthur Wishart Act, Section 4(1)]. The lawsuit may be deemed significant and withheld from disclosure.
• Unconscionable Terms: According to Section 13(1) of the Arthur Wishart Act, courts have the power to declare franchise agreements with unfair conditions as unenforceable. The potentially elevated royalty fee, particularly in light of Barrie Jimmy's popularity, could be regarded as unconscionable. According to Section 13(2) of the Act, courts have the authority to take into account the franchisee's ability to negotiate when assessing whether anything is unconscionable.

Supporting Argument #3

Possible Misrepresentation: If Jimmy deliberately hid the case or minimized its importance, it may be regarded as misrepresentation. In Canadian contract law, it is permissible to cancel contracts if there has been a misrepresentation. Refer to the article "Misrepresentation in Contract Law" at the following link:https://www.lexology.com/library/detail.aspx?g=0b04377d-c40c-43ab-8a50-54df64aea9f4. This bolsters Barrie Jimmy's argument, perhaps rendering the agreement null and void. The case ofS.I. Holdings Inc. v. Kwok provides support for this position. In this case, the court determined that a misrepresentation, regardless of whether it was made innocently, has the potential to make a contract voidable. In Canadian Common Law, Section 168(1) provides the right for a party to cancel a contract if they were induced to enter into it due to a misrepresentation. Jimmy's acts have the potential to be classified inside this category.