Letter sent to Grand & Toy franchisees

In light of the upcoming mediation and the gross inaccuracies and misrepresentations contained in Les Stewart’s letter to Mr. Cunningham, President of the CFA, I trust that you will recommend to your clients that the letter be immediately withdrawn.

Franchisor’s lawyer letter to Grand & Toy Licensee Association
September 27, 2001

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Osler, Hoskin & Harcourt LLP
P. O. Box 50, 1 First Canadian Place
Toronto, ON M5X 1B8
(lawyers for Grand & Toy Limited)

September 27, 2001

SENT BY FACSIMILE

Mr. Evert Van Woudenberg
Gardiner Roberts LLP
Suite 3100
Scotia Plaza
40 King Street West
Toronto, ON M5H 5Y2
(lawyer for the franchisee association)

Dear Mr. Van Woudenberg:

Grand & Toy Limited re: Grand & Toy Licensee Association
Court File No. 01-CV-216772CM

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Enclosed is a copy of a letter dated September 23, 2001 which was faxed by Les Stewart of the Canadian Alliance of Franchise Operators (“CAFO”) to Mr. Richard Cunningham, President, Canadian Franchise Association (“CFA”) on September 24, 2001. This letter, which was copied to senior executives of Boise Cascade, Bank of Montreal, a number of politicians and the media, purports to have been sent on behalf of your client, the Grand & Toy Licensee Association (the “GTLA”) and its members. The GTLA, however, is not copied on the letter. Nor is anyone at Grand & Toy Limited (“Grand & Toy”) for that matter. Given your retainer, I can only assume that you are aware of this letter.

I am surprised at your client’s timing. As you know, a mediation is scheduled for October 15, 2001, I would have thought the GTLA and its members would wait to see what transpired at the mediation before launching an ill-founded complaint against Grand & Toy with the CFA. Further, the fact that it is the CAFO which is complaining on the GTLA’s behalf and not the GTLA directly does not exculpate the GTLA from any action against it and its members in defamation. Grand & Toy previously advised the GTLA that it was defamatory and entirely improper for it to describe Grand & Toy’s decision to stand on it’s bargained for legal rights as “unfair” or “bad faith”. Attempting to move this dispute into the public sphere not only highlights the weakness of your clients’ legal position but demonstrates the extent to which they wish to injure Grand & Toy’s reputation in the marketplace. Grand & Toy will not hesitate to protect its reputation including commencing whatever defamation actions it sees as necessary.

As I have advised you previously, it is not accurate to suggest that the 1998 licensee agreements contain a renewal clause which has somehow been ignored. The licensee agreements specifically provide that they will expire, subject to Grand & Toy’s termination rights, on December 31, 2001. The precise language is as follows: “the term of this Agreement shall commence July 1, 1998 (“Commencement Date”) and shall expire December 31, 2001 (“Expiry Date”), subject to all times to Grand & Toy’s termination rights in Sections 18 and 20 of this Agreement the “Term”). Grand & Toy has not terminated the licence agreements but has decided to let them expire on their own terms.

The licensees knew full well when they entered into the 1998 agreements that the agreements would expire on December 31, 2001. Prior to signing the new 1998 agreements, they asked questions about what would happen if their agreements expired and had legal and other advice.

It is also inaccurate to state that Grand & Toy has “refused to negotiate compensation.” Grand & Toy has offered to enter into new 3-month license agreements with the licensees and has also offered them employment opportunities, both of which were refused on the basis that the licensees wanted to seize these opportunities while maintaining their lawsuit against Grand & Toy. Grand & Toy has also hired many of the licensees’ associates. Further, Grand & Toy has spent considerable time with the licensees negotiating what inventory it would take back at the end of the year. As your clients well know, Grand & Toy is under no obligation to take back any inventory under the terms of the license agreements. Finally and most importantly, Grand & Toy in “good faith” has agreed to attend a full-day mediation session in spite of the fact that it is not required to do so, now that this matter has been transferred to the Commercial List.

In light of the upcoming mediation and the gross inaccuracies and misrepresentations contained in Les Stewart’s letter to Mr. Cunningham, President of the CFA, I trust that you will recommend to your clients that the letter be immediately withdrawn.

Yours very truly,

Jennifer Dolman

c: Grand & Toy Limited


Risks: Canadian Alliance of Franchise Operators, CAFO, Les Stewart, Canadian Franchise Association, CFA, Lawyers threaten to get Code of Ethics complaint letter withdrawn, Threats of lawsuits, Hates publicity, Lawyers issue threatening letters, Intimidation, Canada, 20010927 Osler Letter

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