Court Allows Franchise Class Action Against Midas Canada

Stockhouse:

On 26 March 2009, the Ontario Superior Court of Justice certified a Canada-wide class action lawsuit by Midas franchisees against Midas Canada Inc. Midas Canada is a subsidiary of Midas Inc.

The lawsuit concerns Midas’ decision in 2003 to cease distributing parts to its Canadian franchisees at discounted prices through its wholly-owned distribution system. The franchisees allege that this decision deprived them of the right to purchase parts at a 14.5% discount below net wholesale prices and other advantages which they previously enjoyed.

Midas’ actions in 2003 were part of its international business restructuring which resulted in a dramatic business turnaround of the international auto parts franchisor. However, the franchisees assert in the lawsuit that Midas’ restructuring caused them significant financial losses and was carried out at their expense. The court stated that the claim by the franchisees if proven at trial “could justify a finding of liability in damages, and… an abatement of the royalty (paid by the franchisees) in the future.”

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