Background

In 2021, Mr. Zagros Management Inc., a restaurant franchisor, leased a premises from Yulee Developments Inc. In turn, Mr. Zagros sublet the premises to its franchisee, 11254316 Canada Inc. Under the lease, notices from the landlord to Mr. Zagros were required to be delivered to the premises.

Throughout the operation of the franchise, as a matter of course, the franchisee paid rent directly to the landlord. In March 2024, however, the franchisee failed to pay rent, which resulted in a demand issued by the landlord to the franchisee. Neither party informed Mr. Zagros of the situation.

The arrears remained uncured into April. In response, on April 3, the landlord delivered a notice of default to the premises addressed solely to the attention of the franchisee’s principal. The landlord also emailed a copy of the notice to the principal, but not to Mr. Zagros. The notice provided for a five-day window to pay the arrears.  Despite being informed the next day by the franchisee’s lawyer that his client had not forwarded the notice to Mr. Zagros, the landlord waited until the cure period expired on April 9 before taking steps to actually bring the notice to Mr. Zagros’ attention.

After Mr. Zagros learned of the arrears on April 9, its principal contacted the franchisee’s principal and, believing that the latter would rectify the arrears, left the matter with her. In the meantime, the franchisee’s principal began negotiating with the landlord. The negotiation included a proposal that the franchisee’s principal pay the arrears, albeit once the lease was terminated and a new lease was entered into directly with her. The parties did not disclose these negotiations to Mr. Zagros.

Shortly thereafter, with the arrears still outstanding, the landlord purported to terminate the lease by issuing a notice of termination addressed solely to the franchisee. The landlord and a newly incorporated company controlled by the franchisee’s principal then signed a new lease for the premises. The franchisee’s principal proceeded to open a restaurant competitive with her former franchise from that location.

The Application

Mr. Zagros commenced an application against the landlord, the franchisee, its principal and her newly incorporated company seeking, among other things, a declaration that the default and termination notices were not delivered in accordance with the lease and were therefore void. According to Mr. Zagros, the notices were non-compliant because, as a matter of contractual interpretation, the notice provision required that notices delivered thereunder, at a minimum, not be addressed to the wrong party.

The landlord defended the application on the principal basis that, irrespective of who the default and termination notices were addressed to or the practical consequences of this error, it complied with the strict wording of the notice provision by simply delivering the notices to the premises.

In two endorsements, the application judge accepted Mr. Zagros’ submission:

[T]he notice of termination is deficient. It was not addressed to Mr. Zagros but rather to 112. 112 was not the tenant. I am of the view that the notice of termination had a fatal defect as it was not addressed to Mr. Zagros Management Inc. and did not accord with the provisions of the lease…

…

In my January 2025 Endorsement, I held that the notice of termination was deficient. I did not explicitly address the notice of default dated April 3, 2024. However, that notice is also deficient as I find it was not properly served upon the Applicant.

The Appeal

The landlord unsuccessfully appealed from that judgment to the Ontario Court of Appeal. In its brief reasons, the Court agreed with and elaborated on the application judge’s analysis:

We see no error in the application judge’s findings that the Default Notice and the Termination Notice were deficient because they had not been properly served on Mr. Zagros. The application judge accepted Yulee’s submission that notices were to be delivered to the Leased Premises. However, they did not comply with the requirements of s. 17.11 of the Lease because they were improperly addressed. The Notice of Termination was addressed to 112, rather than to Mr. Zagros, and the Default Notice was addressed to the attention of Ms. Zamani, again as opposed to Mr. Zagros. Accordingly, as the court advised the parties at the oral hearing of the appeal, Yulee’s appeal was dismissed.

Key Takeaways for Landlords and Franchisor Sublandlords

This case provides a clear lesson: Notices under a lease are more than formalities. Properly addressed and delivered notices are essential to protect both landlords (and franchisors acting as sublandlords). Missteps in this process can leave a landlord or sublandlord unable to rely on the notice — a costly mistake that can be avoided with careful attention to the lease.

Remember:

1. Follow the lease to the letter. Default and termination notices must be addressed to the legal tenant. Even a technically minor misaddressing may invalidate the notice.
2. Monitor communications. Franchisors acting as head tenants must ensure that they receive all communications from the landlord. Notice provisions will often provide for the opportunity to amend the address for service. As a best practice, franchisors should consider adding the franchisor’s head office as an additional required address for service under the lease.
3. Establish a disciplined lease administration framework. Beyond staffing or systems, franchisors acting as head tenants or sublandlords should proactively structure their leasing arrangements to ensure visibility and control over defaults and enforcement steps. This may include evaluating whether a tripartite agreement or rent-flow arrangement are appropriate for the system. Thoughtful lease architecture at the outset can materially reduce the risk that critical notices are misdirected, delayed, or leveraged to the franchisor’s detriment.

Daniel Hamson and his team at Sotos LLP acted as counsel to Mr. Zagros on the application and appeal in Mr. Zagros Management Inc. v. Yulee Developments Inc.

Sotos LLP regularly advises franchisors on leasing strategy and structure, including with respect to head leases, subleases, and tripartite arrangements, to ensure franchisors maintain control over premises and minimize enforcement risks across their franchise systems.

About the Author

Daniel Hamson, Sotos LLP

Daniel is a partner in the Litigation Department at Sotos LLP. His practice focuses on complex commercial, corporate, and franchise disputes.

Daniel has been recognised for his litigation work and industry expertise. He is listed as “Ones to Watch” in Best Lawyers in Canada and has been named a “Lawyer to Watch” in the Canadian Legal LEXPERT Directory, as well as in the LEXPERT Canada’s Leading Litigation Lawyers. He is also recognised as “Recommended” in Lexology Index: Canada (formerly Who’s Who Legal).

Daniel can be reached directly at 416.572.7303 or dhamson@sotos.ca

The post Wrong Addressee, Right Outcome: Why Your Lease Notice Might Not Count appeared first on Sotos LLP.

Ashley advises Canadian and international clients on a broad range of corporate and commercial matters, including share and asset acquisitions and divestitures, corporate reorganisations, shareholder agreements, commercial leases, and other business contracts. Her practice also includes franchising, licensing, and distribution, where she guides both franchisors and franchisees on the negotiation of franchise agreements, the purchase and sale of franchised businesses, compliance with legislation, and dispute resolution.

Ashley has been recognised by Chambers Canada 2026 as an Associate to Watch. In addition, she actively contributes to the profession as the Newsletter Editor for the Ontario Bar Association Franchise Law Section Executive, and as a member of the Canadian Bar Association, the Canadian Franchise Association, the American Bar Association Forum on Franchising, and the International Franchise Association.

Ashely strives to provide clear, practical advice that helps clients achieve their commercial objectives with confidence. She is a valued addition to our team.

For further information, please visit her bio page.

The post Welcoming Ashley Caldwell as Senior Associate at Sotos LLP appeared first on Sotos LLP.

Debi brings decades of experience advising Canadian and international clients on franchising, licensing, and distribution matters, corporate and commercial law, and mergers &acquisitions. She is widely recognised for combining legal insight with practical business advice, guiding clients through complex transactions with clarity and confidence.

She is also a trusted advisor to franchisors across diverse industries and has played a leadership role in shaping best practices in Canada. Debi has consistently been ranked in Band 1 by Chambers Canada, Best Lawyers in Canada, and the Canadian Legal LEXPERT Directory, and in 2022 was inducted into the Franchise Times Hall of Fame.

Beyond her client work, Debi is deeply engaged in the legal community. She has served as co-chair of the Ontario Bar Association Annual Franchise Law Conference, actively contributes to the Canadian Franchise Association, the International Franchise Association, and the American Bar Association Forum on Franchising, and is a sought-after speaker and writer.

Known for her collaborative approach and commitment to client service, Debi is a valued addition to our firm. We are delighted to welcome her to the Sotos team.

For further information, please visit her bio page.

The post Welcoming Debi Sutin as Partner at Sotos LLP appeared first on Sotos LLP.

Karine has been counsel on a wide range of class actions and multi-plaintiff actions involving the Charter, Crown liability, institutional abuse, and fiduciary duties before all levels of court in Ontario and before the Superior Court in Quebec.

Before joining Sotos, Karine practiced at leading plaintiff-side class action firms in Toronto.

Karine articled at the Superior Court of Justice in Toronto as the bilingual judicial law clerk, where they worked on civil, criminal, and commercial list matters as well as class proceedings. Karine is bilingual and serves clients in English and French.

Karine holds a common law and civil law degree from McGill University. They were awarded the Justice Harry Batshaw prize for having the highest standing in the Foundations of Canadian Law course.

To learn more about Karine, read their full bio here.

Please join us in welcoming Karine to the team!

The post Sotos Welcomes Karine Bédard as an Associate appeared first on Sotos LLP.

A trailblazer in class actions and a leader in complex civil litigation, Margaret brings her legacy of legal excellence and leadership to Sotos. She has over three decades of experience in successfully prosecuting and resolving class actions and complex civil disputes. Margaret is recognized as a leading class action lawyer and a skilled litigator who acts in all manner of commercial conflicts.

Margaret has led plaintiff and defence-side class actions in various fields, including product liability, consumer protection, fraud, securities misrepresentations, institutional abuse, and professional negligence.

Margaret is also an arbitrator and mediator, who can help litigants reach solutions to their disputes quickly and cost-efficiently. Her wealth of experience in complicated and high-stakes litigation makes her an excellent choice for deciding disputes out of court. Her ADR practice focuses on corporate & commercial litigation, including real estate development, shareholder disputes, multi-party litigation, employment disputes, and any matter involving class proceedings or claims adjudication.

She also sits as an adjudicator on the Law Society Tribunal.

Margaret’s career is distinguished by an array of prestigious accolades that underscore her contributions to the legal field. She received the Ontario Bar Association Award for Excellence in Class Actions in 2022 and is ranked in Chambers Canada for Dispute Resolution: Class Action (Plaintiff). Margaret is consistently listed as “Most Frequently Recommended” in the Canadian Legal LEXPERT Directory for Class Actions and is featured in the LEXPERT Guide to Leading 500 Lawyers in Canada. Additionally, she is recognized by the Best Lawyers in Canada for both Class Action Litigation and Corporate Commercial Litigation and is celebrated in Benchmark as one of the Top 50 Women in Litigation and a Litigation Star in Class Actions.

To learn more about Margaret, read her full bio here.

Known for taking on high-profile social justice cases, Margaret’s courageous advocacy and dedication to addressing institutional wrongdoing have made her a powerful voice for change. Her arrival is a milestone for Sotos, strengthening our leadership in class actions and litigation. We are proud to welcome such a distinguished leader to our firm and look forward to the profound impact she will have on our clients and the legal profession.

Please join us in welcoming Margaret Waddell to the team!

The post Sotos Welcomes Prominent Litigator Margaret Waddell as Partner appeared first on Sotos LLP.

“We are very pleased to be welcoming Daniel to the partnership. Daniel is an inspiration to everyone at the firm for his dedication to client service, his advocacy skills, his sound judgment and for being a pleasure to work with whatever the demands. We wish Daniel the best as he embarks on this next stage of his career.” said Allan Dick, Partner.

Daniel joined the firm in September 2017 as an associate in the Litigation department. A graduate of Osgoode Hall Law School (J.D.) and the University of Victoria (B.A.), Daniel has consistently demonstrated exceptional skill and professionalism in his practice.

Daniel manages a broad civil litigation practice, with a particular focus on all manner of disputes in the franchising, licensing and distribution industry. He applies his extensive knowledge of the industry to formulate and implement effective dispute resolution strategies through litigation, arbitration, mediation or negotiations. In addition, Daniel also represents clients in corporate and commercial disputes, and construction disputes, and is frequently retained to assist in a range of special situations, such as fast-paced injunctions.

He has appeared before every level of court, including the Supreme Court of Canada, as well as before national and international arbitration tribunals.

Daniel has received multiple legal accolades, including being recognized as “Ones to Watch” in Best Lawyers in Canada for Corporate and Commercial Litigation, and being named as a “Lawyer to Watch” by the Canadian Legal LEXPERT Directory in the franchise law category, as well as in the LEXPERT Special Edition – Canada’s Leading Litigation Lawyers.

To learn more about Daniel’s practice, read his full bio here.

Congratulations, Daniel!

The post Sotos LLP Welcomes New Partner, Daniel Hamson appeared first on Sotos LLP.

Idan is a member of the Bar in both the Province of Ontario and the State of Georgia, bringing a wealth of experience to our litigation department. His practice focuses on a variety of subject matters, including franchising and other commercial disputes, professional liability/personal injury defense, and various types of civil litigation.

Idan’s extensive experience encompasses shareholder disputes, commercial contract disputes, injunctive proceedings, and real estate litigation. He also has a strong background in class action work, particularly in the areas of pharmaceuticals and data breaches.

Idan has earned recognition from his peers as a Franchise Times “Legal Eagle” and has been named one of Canada’s ‘Best Lawyers’ in franchise law and personal injury litigation. He has appeared before the Ontario Superior Court and Divisional Court, as well as in the Superior Court of British Columbia and the Alberta Court of Queen’s Bench.

We are confident that Idan’s expertise and dedication will be invaluable to our clients and our firm.

Welcome, Idan!

The post Sotos LLP is Pleased to Welcome Idan Erez to the Firm appeared first on Sotos LLP.

Michael’s practice focuses on corporate and securities law, with a focus on mergers & acquisitions. He advises public and private corporations and strategic investors, and brings significant experience in private and public offerings, strategic financings, corporate takeovers and reverse takeovers, and other corporate restructuring transactions.

Before joining Sotos, Michael was a partner at a global law firm. He has acted for issuers and investment dealers and strategic investors in Canadian, cross-border, and international transactions.

Michael also has significant experience counselling clients on securities regulatory compliance, stock exchange listings and going private transactions, corporate governance, and general corporate matters. Additionally, he counsels clients across various industries, including mining and natural resources, technology, cannabis, financial services, logistics and transportation, real estate, retail, marketing, food and beverage, and health and wellness sectors.

Michael has been recognized for his extensive knowledge and experience in the following publications: The Canadian Legal Lexpert Directory: Corporate Mid-Market, and Mining; Lexpert Special Edition – Canada’s Leading Lawyers: Global Mining; and The Best Lawyers in Canada: Natural Resources Law.

His extensive experience in these areas further strengthens and expands our firm’s capabilities and commitment to providing top-tier legal services to our clients.

“We are thrilled to welcome Mike Sabusco as our newest partner.  I am beyond confident Mike will be a major asset to our corporate law group as we continue on our growth trajectory across every facet of our firm. He will play a significant role in helping us to manage, scale and evolve our mergers & acquisitions practice as we continue to accelerate our momentum in the business law space.” John Yiokaris, Co-Managing Partner

Please join us in welcoming Michael to the Sotos team.

The post Sotos LLP welcomes Michael Sabusco as a partner in our Corporate group appeared first on Sotos LLP.

The post Sotos LLP is pleased to announce that Mohsen Seddigh has been named a Partner appeared first on Sotos LLP.

Jason has been recognized by Best Lawyers in Canada, Lexology, and The Franchise Times as a leading Canadian franchise law practitioner.

The post Sotos LLP is pleased to announce that Jason Brisebois has been named a Partner appeared first on Sotos LLP.