Franchising Focus: Implied Termination Rights

A 2014 decision from the Ontario Superior Court of Justice, France v. Kumon, 2014 ONSC 5890 ("Kumon"), presents an interesting precedent for the proposition that any franchise agreement may be terminable on reasonable notice where the franchise agreement does not otherwise provide for termination rights.

In Kumon, the franchisee entered into an informal oral franchise agreement with the franchisor in 1991. In 1994, the franchisor had a written franchise agreement prepared and asked that all of its existing franchisees sign the franchise agreement. The franchisee decided that the terms were not to her benefit and refused to sign. The franchisor asked the franchisee to sign the franchise agreement again in 1995, but she refused.