After years of litigation, the Superior Court of Quebec has ruled in favour of the Jean Coutu Group in a lawsuit with a franchisee over franchise, or royalty, payments. The legality of these fees, paid by pharmacists who are franchisees, has been on the table for years.
The question in Quesnel v. Groupe Jean Coutu was whether a contractual clause providing for a pharmacist-owner in the Jean Coutu chain of drugstores to pay a franchise fee on revenues from the sale of medicines contravened public policy and s. 49 of the Code of Ethics of pharmacists in Quebec. This section of the Code prohibits pharmacists from sharing profits from the sale of medications, or from their fees, with a non-pharmacist.
In 2008, Gatineau pharmacy owner Michel Quesnel was charged by the Ordre des Pharmaciens du Quebec with violating the regulator’s code of ethics by sharing profits with the Jean Coutu Group, which operates a network of 418 franchised stores in Quebec, New Brunswick and Ontario. Quesnel was a franchisee of the Jean Coutu Group. Quesnel pleaded guilty to the charge, but in turn sued the Jean Coutu Group for all the franchise fees he had paid over the nearly 30 years he had done business with Jean Coutu through the six pharmacies he then owned.