Cutting off Franchisee's Supplies Leads to Award of Punitive Damages

  • March 10, 2020
  • Jonathan Messiano-Crookston and Alana Spira

0923063 BC Ltd  (“092 BC”) and Tariq Waheed (“Waheed”) (collectively, the “Franchisee”) sued JM Food Services Ltd. and Freshslice Properties Ltd.(the “Franchisor”) for breach of contract. The Franchisee sought damages for loss of income to May 31, 2025, loss of goodwill and punitive damages.


Mr. Russell was the founder, sole director and president of the Freshslice Pizza business. Waheed originally worked for Mr. Russell but left in October 2011 to operate as a Freshslice Pizza franchisee. Initially, the franchised business lost money, but Waheed grew the business to be profitable.

Waheed and Mr. Russell had a tense relationship. They had several conflicts, including about whether Waheed could sell only Halal products and the cleanliness of the franchised restaurant.

In the summer of 2012, Waheed gave Mr. Russell $25,000 to purchase a second franchise. When Waheed changed his mind and asked for this money back, Mr. Russell refused, and instead applied the money to pay down a loan Waheed owed him.

Between February and June 2013, the Franchisor issued three warning letters to Waheed purporting to warn him of “material defects of a serious nature”. Two of these letters were sent following a physical altercation between Mr. Russell and Waheed at the franchised restaurant. After this incident, a food distributor told Waheed that it had been told by the Franchisor to stop supplying Waheed with product. This forced Waheed’s business to close.