The franchisor, Garden Delicious Inc, has 73 franchised outlets across Canada using the theme "healthy eating". Its Surrey, B. C. franchisee, Tom Cain, has been adding bagels to the regular "authorised" menu. Garden Delicious Inc. has asked Tom on several occasions to stop, but he has refused saying that the contract does not specifically prohibit adding items to the menu. Legally speaking, will the franchisor be able to stop this practice?

Question

Quizplus · Accepted Answer

The franchisor will be able to stop this practice because there is an implied term in the franchise agreement that the franchisee is to protect the goodwill and trademarks and trade secrets of the franchisor. Adding unauthorized items to the menu could potentially harm the brand image and reputation that the franchisor has worked to establish. Therefore, the franchisor has the legal right to enforce this implied term and prevent the franchisee from adding unauthorized menu items.

The Franchisor, Garden Delicious Inc, Has 73 Franchised Outlets Across