Write Derek and Danielle:
The issue of post-term non-competition injunctions is always a hot topic for retail licensors and franchisors. The protection of a brand’s intellectual property and confidential methods is key to the preservation of retail licensing and franchising business practices. Without post-term covenants that prevent licensees or franchisees from acquiring the knowledge of how to run a business and then leaving to do it for themselves, licensors and franchisors may not have an effective way to protect their businesses from being duplicated by their former partners.
Accordingly, the extent to which Canadian courts are willing to enforce post-term non-competition covenants is of keen interest to retailers. Courts have shown an intention to enforce these covenants in certain circumstances but have paid close attention to the severity of the terms of the covenants, the impact of the enforcement of covenants on all of the parties involved, and whether the parties have put forth sufficient evidence to convince the courts of their positions.
This judicial balancing of interests has been on display in three recent decisions: Lightbox Enterprises Ltd. v. 2708227 Ontario Inc., 2022 ONSC 1873, (Lightbox Enterprises), Garcha Bros Meat Shop Ltd. v. Singh, 2022 BCCA 36; (Garcha); and RFSP Equipment v. Singh, 2022 BCSC 538 (Singh).
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