Introduction

Most franchise agreements specifically: (i) grant the franchisee the right to operate a business from a single location; and (ii) state that the franchise agreement’s term expires either at a specified date or when the franchisee ceases to have the right to operate the franchised business from the premises, using wording along the following lines: 

“Subject to the provisions of this Agreement, the Franchisor hereby grants to the Franchisee the right and license to operate the Franchised Business at the location specified in Schedule “A” … for a term (the “Term”) equal to the lesser of: 

1. ten (10) years; and
2. the term of the Lease as may be the case, and any renewals thereunder;” 

The decision of the Saskatchewan King’s Bench in Vern’s Pizza Company Limited v 101011333 Saskatchewan Ltd, involved the court determining when a franchise agreement which granted the franchisee a right to operate two franchised businesses from two separate leased locations, comes to an end. 

In the April 2022, Toronto Law Journal, I wrote an article entitled “There is No Afterlife for Administrative Monetary Penalties After Bankruptcy”. In that article I used the following hypothetical.

A securities broker may be alleged to have defrauded investors by making false statements regarding the use of their funds, and by using invested funds for improper purposes.  In the administrative regime, the securities broker may face restrictions on professional activities or an administrative monetary penalty (“AMP”) of not more than a $1 million for each failure to comply.

Following the imposition of a significant AMP in the millions of dollars, that same securities broker may think that she was fortunate that she was not prosecuted for fraud under the Criminal Code. She may also take some solace in the thought that the AMP, unlike a criminal fine in relation to fraudulent conduct, would not survive a pending bankruptcy. This  would enable her to get on her feet again.

Securities regulators take a different view and would argue that extinguishing the AMP would undermine the deterrent effect of the penalty imposed