Duhaime's Law Dictionary


Franchise Definition:

A licensing contract in which a holder of certain legal rights gives another to sell or package those rights.

In Signature Management, Justice Estey of the SKQB used these words:

"In its simplest terms, a franchise is a license from owner of a trademark or trade name permitting another to sell a product or service under that name or mark. More broadly stated, a franchise has evolved into an elaborate agreement under which the franchisee undertakes to conduct business or sell a product or service."

In Canada Post Corporation, the adjudicator adopted these words:

"Franchising is a method of operation used by companies to distribute products or services. The company (the franchisor) grants to the operator (the franchisee) the right to sell a product or service and to operate a business along the lines developed by the franchisor and using the franchisor's trade name or other designation.

"Ideally, it is a continuing and supportive relationship between the parties to work for the benefit of both. But there are degrees of relationship and of success.

"The right or privilege granted is called the franchise and it may include the right to sell the parent company's products, use its name, adopt its methods or use its symbols and trademarks. It may include only some of these rights.

"Territory of operations may or may not be exclusive, and support may or may not be set up on a continuing basis."

In Shoppers Drug Mart, the labour tribunal wrote:

"In any franchise agreement, such as McDonald's or Canadian Tire, for example, what is sold is the right of the franchisee to represent itself as the franchisor. A McDonald's franchisee is not simply a seller of hamburgers - he is McDonald's at that location. The Canadian Tire franchisee does not enter into the franchise agreement simply to sell Canadian Tire products and services. He contracts to be able to represent himself as Canadian Tire at that location."

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