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Russell Wangersky: Things aren’t always what they seem

Scales of justice.
The scales of justice. — SaltWire Network

This is a column that’s about a court case in Nova Scotia, and things not being what they seem.

It’s still in mid-lawsuit, so there’s no nice, tidy ending — but there is a handy Latin catchphrase.

It’s good old caveat emptor — “Buyer beware.” Although, in this case, it’s pretty hard for the buyer to know what they’re getting into.

The nuts and bolts of the case are that Dale Kaehler and Josee Desjardins thought they had hired a regionally recognized company, SystemCare Cleaning and Restoration Ltd., to do a cleanup after a fire. They weren’t satisfied with the work, and when they went to court, they found that they weren’t dealing with SystemCare, but with a franchise of the company. SystemCare argued it had no responsibility to deal with the issue; as the company put it, Kaehler and Desjardins had sued the wrong entity.

It can be confusing. If a franchise owner and a franchise operator sign a contract between themselves agreeing that the operator alone is responsible for any issues, that’s something a customer might not know anything about.

In this case, the franchise contract contained a clause that read “The parties hereby acknowledge and agree that each is an independent contractor … no party has any authority to enter into any contract, assume any obligations or to give any warranties or representations on behalf of any other party.”

It can be confusing. If a franchise owner and a franchise operator sign a contract between themselves agreeing that the operator alone is responsible for any issues, that’s something a customer might not know anything about.

But the person buying the service wouldn’t know that. As the judge pointed out, “During his initial meeting with Mr. Kaehler, Mr. Hubley wore a shirt with the SystemCare logo. The labourers who performed the work as well as the on-site supervisor wore attire with the SystemCare logo. The trucks used displayed the name ‘SystemCare’ and bore the SystemCare logo. When Mr. Kaehler visited Mr. Hubley’s office in Digby, in July 2006, the sign on the front door read ‘SystemCare’ and bore the SystemCare Logo.”

If someone pulls up to your door wearing a courier company uniform, driving a vehicle with the courier company’s logo, and using invoices and other documents emblazoned with the company’s name and colours, you could be forgiven for thinking that’s exactly who you’re dealing with.

SystemCare had a different argument; the judge says the company’s claim is that, “It has no direct involvement in franchises operations, but instead focuses on business development of the ‘SystemCare’ trademark, performs quality control, and supplies equipment and other materials to its franchisees. All individual franchisees operate independently and are owned independently.”

It’s not the first time this situation has come up — the judge in the case referenced a 2000 incident where H&R Block argued it should not be responsible for the errors of a franchisee, arguing that the franchise agreement excluded any responsibility.

In that case, the judge found, “The corporation’s actions — its advertising, its documents, its presentation to the public — would lead any reasonable person in the plaintiff’s position to believe that the people operating the Melfort office were acting as agents of H&R Block Canada Inc. … H&R Block Canada Inc. set up its franchises as ‘H&R Block’. The natural assumption would therefore be that clients would be dealing with an agent of the parent company, H&R Block Canada Inc. (and) nothing was done to disabuse them of this assumption.”

It’s arisen with other franchise agreements as well.

There’s a lot left to happen in this particular lawsuit — including any finding about whether the work was done properly or not. Even the question of whether the SystemCare parent is a party to the suit won’t be fully decided until there’s a trial.

But it’s certainly food for thought.

Russell Wangersky’s column appears in 36 SaltWire newspapers and websites in Atlantic Canada. He can be reached at russell.wangersky@thetelegram.com — Twitter: @wangersky.

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