Franchisors: thinking about expanding into Canada? Better think twice.

Since 2000, the Dunkin' Donuts franchisees and their franchisor have been doing battle in Quebec. In Bertico, Inc. v. Dunkin' Brands Canada, originally filed on May 20, 2003,1 the essence of the franchisees' claim was whether the franchisor had fulfilled its obligations to its franchisees—a simple issue, it would appear. However, that turned out not to be the case.

At one point in time, the Dunkin' Donuts brand had been highly successful in penetrating the Quebec market. At its height, there were 212 stores operating in Quebec. However, as time oozed by, the system began to deteriorate. By the time this action was filed, the number of units had been reduced to 25, and at the time the decision was rendered by the Superior Court, the trial court, it was down to 12. Today, there are fewer than half a baker's dozen units in Quebec.