Introduction
The recent decision in Ford Credit Canada Ltd v Welcome Ford Sales Ltd(1) may have significant implications for franchisors whose franchisees become insolvent, as the Alberta Court of Appeal ruled that pursuant to the Bankruptcy and Insolvency Act of Canada, a franchise agreement may be assigned by a trustee in bankruptcy.Section 84.1 of the act allows a trustee to apply to court for an order assigning the rights and obligations of a bankrupt under an agreement. In deciding whether to make the order, the court must consider, among other things, whether the person to whom the agreement is to be assigned can perform the obligations incumbent on it pursuant to the agreement, and whether it is appropriate to assign the agreement to that person. Such an order may be made even in the presence of a contractual consent requirement.
Facts
The franchisor, Ford Motor Company, appealed a decision allowing the trustee of the franchisee, Welcome Ford Sales Ltd, to assign the auto dealership pursuant to Section 84.1 of the act.