Ontario court orders mandatory injunction in franchise dispute
January 13, 2026
BY Kevin Zakreski
In Keller Williams Realty v VIP Realty Inc., 2025 ONSC 7152, the plaintiffs sought “an order enjoining the Defendants from operating competing real estate brokerages, breaching various terms of their franchise agreements”.
“In essence”, the court explained, “the Plaintiffs raise two sets of claims against the Defendants. KWR’s claims concern the Defendants’ alleged breach of the restrictive covenants contained in their license agreements with KWR. . . . KWR argues that the operation of the Defendants’ new brokerages under the aegis of a competing real estate franchisor breaches various contractual terms between the parties. KWR claims that the breached contractual terms include the restrictive covenants contained in their license agreements”.
The plaintiffs were seeking a pre-trial injunction against the defendants, and the court accepted the defendants’ argument that “because the relief requested amounts to a mandatory injunction, the first arm of the RJR-MacDonald test should require a higher standard of proof than a serious issue to be tried. It should require proof of a strong prima facie case”.
After an extensive review of the merits of the plaintiffs’ case and the leading authorities, the court found that “there is a strong prima facie case that the restrictive covenants in the License Agreements are both reasonable and enforceable against the Defendants. Further, the Defendants have breached those terms by joining a competing real estate franchise during the term of the License Agreements. Accordingly, there is a strong likelihood that the Plaintiffs will succeed in this proceeding following trial”.
The court also found that the plaintiffs had met the second element of the test:
From the law and the evidence before me, I find that KWR will suffer irreparable harm if an injunction were not granted. I say this because:
1. The loss of two major franchises in two major markets, with the loss of about six hundred agents, all to a larger direct competitor, causes great harm to KWR.
2. That harm would be compounded by the anticipated reaction of other KWR franchisees if this motion were denied. Those franchisees would learn that the restrictive covenants in their license agreements, which both bind them to KWR and protect them from KWR competitors, are of little value. That would most likely shrink the goodwill and ultimately, the value of the KWR system in Canada.
3. Moreover, the Defendants’ breaches of the License Agreements would likely significantly set back any KWR replacement franchises in the applicable Ottawa and Mississauga territories. In addition to lost goodwill and market share, those replacement franchises would be faced with having to compete with former KWR franchises in those same territories
After a brief review of the third element, the court concluded that “the balance of convenience tilts towards the Plaintiffs”.
Finally, the defendants argued that the plaintiffs weren’t entitled to the injunction because they came to the court with unclean hands. The court dismissed this argument in short order:
Undoubtedly, inasmuch as the Plaintiffs seek to obtain equitable relief in the form of an injunction, the clean hands doctrine applies. But I have not found that KWR engaged in any improprieties regarding the Defendants which would cause me to invoke the clean hands doctrine to deny to the Plaintiffs the relief they seek.
