Mamma Mia! Lessons From Queen Mamma on Renewal, Notice and Termination

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A recent Ontario Superior Court of Justice decision offers an important reminder for franchisors and franchisees alike: informal renewal arrangements can create significant legal uncertainty.

In Queen Mamma Ltd. et al v. 2755060 Ontario Inc. et al, 2026 ONSC 1686, Justice Mathen clarified franchisee termination rights in the context of a long-standing franchise relationship where the parties continued operating without executing a written renewal agreement.

In this case, the court addressed what happens when a franchise relationship continues without a signed renewal agreement, how reasonable notice is assessed in a month-to-month arrangement and when post-termination conduct may become actionable misconduct.

The Facts of the Case

Ajmal Anwari (the “Plaintiff”), through Queen Mamma Ltd., operated a Mamma’s Pizza franchise on Queen Street East in Toronto for more than a decade. His most recent written franchise agreement was executed in 2014. Under that agreement, renewal after five years required: (1) compliance with the agreement; (2) a renewed lease or sublease and (3) execution of a new written franchise agreement.

Although the Plaintiff and the former franchisor reached an agreement on certain commercial terms in 2019 (including rent and royalties), the Plaintiff repeatedly declined to sign a written renewal agreement. Negotiations continued informally into 2020, including during the COVID‑19 pandemic. In October 2020, the Mamma’s Pizza franchise system was sold to a new franchisor, 2755060 Ontario Inc. (the “Defendant”).

After further attempts to secure a signed renewal agreement failed – and following an acrimonious meeting between the Plaintiff and the new franchisor – the franchise was terminated on two days’ notice in June 2021. The Plaintiff responded by protesting outside the store for several months.

The Plaintiff sued for wrongful termination, breach of the Arthur Wishart Act (Franchise Disclosure), 2000 (the “Act”) and other equitable relief. The franchisor counterclaimed for nuisance, defamation, trespass and intentional interference with economic relations on account of the Plaintiff’s spirited post-termination conduct.

Determining the Governing Franchise Agreement

As the parties did not formally execute a renewal agreement, Justice Mathen constructed the governing franchise agreement. The court found that both the former franchisor and Defendant had knowingly permitted the Plaintiff to continue operating while negotiations continued and that, by 2021, the parties were operating under a month-to-month franchise relationship. This conclusion rested on the parties’ conduct and course of dealing, including their extended franchise renewal negotiations and the franchise system’s history of formal written agreements.

For the court, it was particularly significant that the Mamma’s Pizza franchise system was structured around formal written agreements, and the parties frequently revised proposed terms during negotiations.

Reasonable Notice in a Month-to-Month Franchise Relationship

Having constructed a month‑to‑month franchise agreement, Justice Mathen concluded the agreement was only terminable on reasonable notice. In assessing what was reasonable, the court considered the parties’ overall dealings, including the lengthy but unsuccessful renewal negotiations, the Plaintiff’s failure to sign a new agreement, the breakdown in discussions and the four-week period between the breakdown and the termination letter.

The court rejected the Defendant’s position that two days’ notice was sufficient but held that the Plaintiff was “not entitled to a great deal more.” In the circumstances, 30 days’ notice was reasonable, resulting in an award of $10,000 for the Plaintiff.

The court also dismissed the Plaintiff’s fair dealing claims, finding that while the parties’ conduct during the negotiations was far from ideal, neither had acted so egregiously as to breach the Act.

Post-Termination Conduct and Counterclaims

Following termination, the Plaintiff engaged in picketing, signage, social media posts and interactions with customers, which the Defendant alleged amounted to nuisance, defamation and economic interference.

The court rejected almost all counterclaims of the Defendant, aside from one regarding minor trespass resulting from posters being glued to the store’s windows. For this, the court awarded nominal damages of $100.

Key Takeaways for Canadian Franchisors

This decision highlights the following lessons:

• Allowing a franchise to continue operating without a signed renewal can limit termination rights and trigger reasonable notice requirements.
• Courts may infer a month-to-month relationship based on the parties’ conduct.
• Failure to provide reasonable notice in that context may result in liability.
• Strained negotiations alone will not necessarily breach the duty of fair dealing under the Act.

The Franchising Group at Aird & Berlis LLP will continue to monitor developments in franchise law. To learn more, please contact the authors or a member of the group.