Party who did not assume business risk and had no meaningful opportunity to make profit was an “employee”

Supreme court | Contracts | Franchising contracts | Nature of contract

M provided cleaning and maintenance services through network of approximately 450 franchises. FB entered into franchise agreement with M, but, five months later, terminated agreement. FB was frustrated by his lack of profits and inability to develop his business. Committee responsible for application of Act commenced legal proceedings against M on behalf of FB. Committee argued that, pursuant to Act, FB was employee and, as such, was entitled to compensation. Trial judge concluded that FB was independent contractor and was not entitled to amount claimed. Majority of Court of Appeal held that trial judge misapprehended nature of contractual relationship between M, its clients and FB. Majority concluded that FB was actually employee and M was ordered to compensate FB. M appealed . Appeal dismissed. In present case, FB did not assume business risk and had no meaningful opportunity to make profit. Hence, it could be said that FB was “employee” within meaning of the Act. As such, relationship between FB and M was subject to the Decree. Therefore, decision of majority of Court of Appeal should be confirmed.

Modern Cleaning Concept Inc. v. Comité paritaire de l'entretien d'édifices publics de la région de (2019), 2019 CarswellQue 2950, 2019 CarswellQue 2951, 2019 SCC 28, 2019 CSC 28, Wagner C.J.C., Abella J., Moldaver J., Karakatsanis J., Gascon J., Côté J., Brown J., Rowe J., and Martin J. (S.C.C.); affirmed (2017), 2017 CarswellQue 7138, 2017 QCCA 1237, Bélanger J.C.A., Morin J.C.A., and Kasirer J.C.A. (C.A. Que.).

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