Class Action by Franchisees against Quiznos and Food Distributor Given Green Light by Appeal Court

TORONTO, April 28/CNW/ – On 27 April 2009, the Ontario Divisional Court approved for certification a Canada-wide class action lawsuit brought by Quiznos franchisees against their franchisor and its designated supplier, Gordon Food Services (GFS).

The class action alleges that Quiznos violated its franchise agreements and the Competition Act, a federal statute intended to prevent price maintenance and conspiracies to maintain prices.

The action alleges that Quiznos, which requires its independently owned franchised businesses to purchase supplies from GFS, acted together with GFS to artificially inflate for their own benefit the prices paid by Quiznos operators for their supplies and that such practices violate laws requiring franchisors to deal fairly with their franchisees.

Quiznos franchisees have complained about overcharging on supplies for many years. Until this decision though, the franchisees’ efforts to stop the alleged overcharging were resisted by Quiznos and GFS.  The court drew attention to Quiznos’ heavy-handed tactics in repelling these efforts.

According to Douglas Johnson, the lead plaintiff and President of Quiznos’ Canadian franchisee association, “It is vital that franchisees have access to competitively priced supplies in order to have a chance to succeed.  Without the ability to bring this case forward as a group, franchisees face insurmountable obstacles in enforcing their legal rights.  We now have a real chance to fix the problems of the past and help franchisees in the future.”

In considering the suitability of Quiznos franchisees asserting their claims as a class action, the court endorsed the franchisees’ right to band together to seek justice:

“In our view, a class proceeding would be fair, efficient and manageable, and preferable to any alternative to resolving this claim because of the significance of the common issues in the context of the entire claim. Moreover, a class proceeding would best advance the goals of judicial economy, access to justice and behavior modification.”

If you would like to learn more about this case, please contact David Sterns at dsterns@sotosllp.com 416.977.5333 ext 313 or Allan D.J. Dick at adjdick@sotosllp.com 416.977.5333 ext 309.