Interim Orders That Saved a Burlington Franchise Mid-Dispute

The situation

Eleni, a university professor, and Kenneth, an air traffic controller, had never run a business before they put roughly $150,000 each into a fast-casual food franchise location in Burlington. The third investor, Winnie, brought less capital but more experience, and the three agreed she would run daily operations while Eleni and Kenneth stayed on as directors and shareholders, reviewing financials a few times a year and collecting distributions. On paper, the three held shares in a corporation in roughly a 37.5/37.5/25 split. In practice, only Winnie had signing authority on the operating bank account, a setup the franchisor's onboarding process had nudged them toward for simplicity.

For the first year, the arrangement worked. The location performed well, and Eleni and Kenneth received the modest distributions they expected. Then the payments stopped. Winnie said the business was reinvesting in equipment and a slow season had eaten into cash flow. Eleni and Kenneth had no independent way to check this, since neither had bank access and Winnie controlled the relationship with the accountant. The explanation held for a few months, until a supplier mentioned to Kenneth, in passing, that catering and wholesale orders were now being invoiced through a different company name.

Neither Eleni nor Kenneth had gone into the investment expecting to police their partner. Eleni's academic schedule and Kenneth's rotating shifts at the control tower were part of why the arrangement made sense in the first place — they wanted a business that could run without their daily involvement, with Winnie as the operator they trusted to handle it. That trust was the whole basis of the deal, and it was also, they now realized, the reason they had no independent visibility into what was actually happening with the money.

What the review found

Once Treadstone Law was retained, the first step was reconstructing what records existed: the shareholder agreement, corporate minute book, past bank statements Eleni and Kenneth had seen, and whatever the supplier and a couple of other contacts were willing to describe. A pattern emerged. Winnie appeared to have incorporated a second company roughly eight months earlier and had been directing an increasing share of catering and bulk orders through it instead of the shared corporation, while the storefront's day-to-day sales stayed where they belonged. Based on the volume the supplier described, the diverted revenue looked to be in the range of $180,000 to $200,000 over that period.

This raised an oppression claim under the Ontario Business Corporations Act. That statute lets a shareholder ask the court for a remedy when the conduct of a corporation, or of the people who control it, unfairly disregards that shareholder's interests or defeats the reasonable expectations they had when they invested. Eleni and Kenneth had reasonably expected to see financial records, share in distributions, and have a business partner acting in the company's interest rather than a competing one she owned outright. A director who steers corporate opportunities to a company she personally controls, without the other shareholders' knowledge or consent, is also breaching the fiduciary duty every director owes to act honestly and in the corporation's best interest.

The urgent problem was not just the past diversion but what might happen next. Winnie held sole signing authority on the only bank account tied to the franchise agreement. If she moved further funds, changed the account, or let the franchise fall into arrears while Eleni and Kenneth pursued a claim that could take a year or more to reach trial, there might be little of the business left to recover by the time a court ruled on the merits.

What we did

1. Sent a formal demand for financial disclosure. Before going to court, Eleni and Kenneth were entitled as directors and shareholders to inspect the corporation's financial records. A written demand created a clear record of the request and of Winnie's refusal to provide meaningful answers, which mattered later in showing the court that reasonable steps had been tried first.
2. Prepared an oppression application alongside a motion for interim relief. Rather than waiting to build the full case before filing, we moved on two tracks at once: the underlying oppression application seeking an accounting and compensation, and a separate urgent motion asking the court to preserve the status quo while that application proceeded.
3. Focused the interim motion on three specific asks. We sought an order requiring joint signing authority on the operating account so no further transfers could happen without both remaining shareholders' knowledge, an order restraining Winnie from diverting company business to any other entity she controlled, and an order requiring an independent bookkeeper to have ongoing access to the accounts pending trial.
4. Supported the motion with the evidence available. Courts grant this kind of urgent interim relief when a party shows a real risk of harm before the main case can be heard, not proof of the full claim. The supplier's account, the gap in expected distributions, and the timeline of the second company's incorporation were enough to establish that risk.
5. Served the motion on short notice. Because the risk of further diversion was ongoing, the motion was brought promptly rather than on the usual longer notice period, with the court's permission, so that Winnie could not use the lead time to move more funds before the hearing.
6. Opened a settlement channel once the order was in place. An interim order changes leverage. Once Winnie could no longer move funds unilaterally and an independent bookkeeper had visibility into the books, continuing to litigate toward a full trial became a much less attractive option for her than resolving the dispute directly.

The outcome

The court granted the interim order in full: joint signing authority went into effect within days, and the independent bookkeeper began reviewing transactions the same week. The diversion stopped immediately, since Winnie could no longer route company revenue through her second corporation without Eleni and Kenneth seeing it happen.

With the business stabilized and the accounting underway, the parties moved to negotiate rather than spend another year or more heading toward a trial. An independent valuation put the franchise business at roughly $750,000. Winnie's 25 percent stake would ordinarily have been worth close to $190,000, but once the diverted revenue was factored in as an offsetting claim against her, the two figures came close to cancelling out. She agreed to transfer her shares to Eleni and Kenneth for a modest payment, well below what her stake would otherwise have commanded, in exchange for the corporation releasing any further claim against her for the diverted funds.

Eleni and Kenneth ended up owning the business outright, with the franchise location, its supplier relationships, and its full revenue stream intact. The outcome turned on timing: because the interim order was in place within weeks of the diversion being discovered, rather than after a full trial many months later, there was still a functioning business worth fighting to preserve. Had they waited to file only the underlying oppression claim and let it run its ordinary course, the value at stake by the time of any judgment could have been substantially smaller.

The buyout also closed the file without a trial, which mattered to both sides. Trials in oppression cases can run well over a year once examinations, expert valuation evidence, and court scheduling are factored in, and the outcome even then is never guaranteed. By resolving the dispute through negotiated share transfer once the interim order had leveled the playing field, Eleni and Kenneth avoided that additional year of uncertainty and cost, and Winnie avoided a judgment that, on the evidence gathered, was unlikely to have gone in her favour.

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