When a franchise ends, the next fight is often over what the former franchisee can do. In F45 Training Canada Limited v. 2685802 Ontario Limited, 2026 ONCA 775, released November 3, 2026, the Court of Appeal for Ontario held that post-term covenants must be interpreted in context before a court finds ambiguity. Read that way, neither the non-compete nor the non-solicit was ambiguous. The non-compete was still unenforceable as overbroad. The non-solicit was enforceable, and member-conversion outreach breached it (paras. 4, 35–44, 52–59).
The decision at a glance
Citation: F45 Training Canada Limited v. 2685802 Ontario Limited, 2026 ONCA 775 (Court of Appeal for Ontario; van Rensburg, Miller and Coroza JJ.A.; reasons by van Rensburg J.A.). Heard March 3, 2026; released November 3, 2026.
Official text: Court of Appeal for Ontario decision
Result: appeal allowed. Non-competition clause unenforceable as overbroad; non-solicitation clause reasonable and enforceable; extent of breach and remedy remitted to the Superior Court (paras. 4, 54, 57–60).
What happened
The appellant franchises group fitness studios specializing in High Intensity Interval Training. In March 2019 it entered a five-year franchise agreement with 2685802 Ontario Ltd. for an F45 studio in Whitby. The individual respondents signed as key persons and guarantors (para. 5). The studio opened in November 2019 (para. 6).
In October 2024 the franchisees said they would not renew. The same month they signed with another fitness brand, extended the mall lease, and contacted customers about a "rebranding," offering to swap F45 memberships. A funding pitch said they expected to keep 98% of the studio's 300 members (para. 7).
Clause 20 set two-year post-term non-competition and non-solicitation restrictions (para. 8). The franchisor sought a permanent injunction, alleging the new studio in the same premises would breach the non-compete and that membership outreach breached the non-solicit (para. 9). The application judge found both clauses ambiguous as to restricted activities, did not decide reasonableness, and dismissed the application (paras. 1, 11–16).
Interpret first; ambiguity second
Restrictive covenants are presumptively unenforceable as restraints of trade unless reasonable between the parties and with reference to the public interest (paras. 11, 21). Meaning — including ambiguity — is a question of contractual interpretation. An extricable error of law includes applying an incorrect principle (para. 18).
If unresolved ambiguity remains after interpretation, the covenant is unenforceable and reasonableness need not be reached (paras. 29–30). Interpretation requires reading the text as a whole, in light of surrounding circumstances, in a commercially sensible way (para. 31). Courts should not "strain to create an ambiguity where none exists"; finding ambiguity where none remains is an extricable error of law (para. 34).
The application judge erred by taking a decontextualized approach. The question is whether unresolved ambiguities remain at the end of the analysis, not whether words can bear more than one meaning in the abstract (paras. 4, 35, 44).
Neither clause was ambiguous
On the non-compete, a broad "similar to or competitive with" list, "including but not limited to" examples, and a reference to an Operations Manual did not create unresolved ambiguity when read with the enumerated categories and the rest of the agreement (paras. 37–39).
On the non-solicit, "any business or customer of the Franchise Business" was clear once read with the franchisor's ownership of goodwill and member information. "Or otherwise" guarded against indirect circumvention; it did not make the clause vague (paras. 40–43).
Reasonableness: non-compete fails; non-solicit stands
Because the record was complete, the Court decided reasonableness itself (paras. 4, 47). Factors include proprietary interest, time and geography, and activity scope (para. 48). A franchisor may protect goodwill in its system, including trade secrets, method of operation and contacts (para. 48).
The non-competition clause was unenforceable. F45's interest was a one-stop-shop group fitness system. Barring involvement in many single-purpose classes — such as dance, yoga or outdoor exercise — went beyond what was needed to protect confidential information, customer relationships and goodwill (paras. 52–54).
A suitably restrained non-solicit is more likely to balance competing interests than a non-compete (para. 55). This one protected ownership of studio goodwill and membership information and was limited to what was necessary, so it was reasonable and enforceable (paras. 56–57).
Breach and next steps
Within the non-solicit term, the respondents contacted Whitby West F45 members, encouraged them to join the new studio and offered inducements. That breached the non-solicitation clause (para. 58). The record was insufficient to fix the full extent of breach or the remedy, so those issues were remitted to the Superior Court (para. 59). The appeal was allowed on those terms (para. 60).
What changed, and what didn't
The Court applied settled interpretation and restraint-of-trade principles. It left open whether franchise covenants get the same rigorous scrutiny as employment covenants; that issue did not decide the case (paras. 23–27). In practice: interpret in context first; then ask whether ambiguity is unresolved; then test activity, time and geography against legitimate interests. A broad activity ban can fall even if time and geography look limited, while a narrower non-solicit tied to customer goodwill may stand (paras. 35, 52–57).
Who this affects
Franchisors drafting or enforcing post-term covenants in Ontario (paras. 1, 8, 48).
Franchisees and guarantors planning an exit, rebrand or nearby new location (paras. 5, 7, 9).
Other commercial parties using non-competes and non-solicits, because the interpretation-before-ambiguity holding rests on general contract principles (paras. 30–35).
Practical takeaways
Interpret before you cry ambiguity. Read the covenant with the whole agreement and surrounding circumstances first (paras. 30–35, 44).
Activity scope matters. A two-year, geographically limited non-compete can still fail if it bars too many activities (paras. 13, 52–54).
A tight non-solicit may do the real work. Where membership data is the franchisor's, a limited non-solicit is more likely to stand than a sweeping non-compete (paras. 55–57).
Exit outreach is high risk. Converting former franchise customers can breach a valid non-solicit even if the non-compete falls (paras. 58–59).
Remedies may need a further hearing. Breach can be clear while the extent of breach and remedy still need to be decided, for example by a trial of an issue or a reference (para. 59).
Frequently asked questions
Are franchise non-competes automatically unenforceable in Ontario?
No. They are presumptively unenforceable as restraints of trade, but they can stand if reasonable between the parties and with reference to the public interest (paras. 11, 21). Here the non-compete failed for overbreadth of activities (paras. 52–54).
What must a court do before finding a covenant ambiguous?
Interpret it using ordinary contract principles, including the agreement as a whole and the surrounding circumstances. Only unresolved ambiguity after that analysis makes the covenant unenforceable without a reasonableness review (paras. 29–35).
Why did the non-solicit survive when the non-compete did not?
It reasonably protected goodwill and membership information and was limited to that purpose (paras. 55–57). The non-compete barred more activities than those interests required (paras. 52–54).
Did the former franchisees breach the non-solicit?
Yes. Communications encouraging members to join the new studio, with inducements, breached it. Extent and remedy were remitted to the Superior Court (paras. 58–59).
Did the Court decide whether franchise covenants get employment-level scrutiny?
No. The ongoing debate was noted and left undecided; the result did not turn on the level of scrutiny (paras. 23–27).
Facing a franchise exit or a restrictive covenant dispute? Book a consultation
Francis Mehr LLP handles franchise and commercial litigation for franchisors and franchisees in Ottawa and across Ontario. See our franchise law page. Book a consultation with the lawyers at Francis Mehr LLP: call (613) 226-1011 or contact us.
Written by the lawyers of Francis Mehr LLP. Published [DATE OF PUBLICATION]; reflects the decision released November 3, 2026. This post is general information, not legal advice.