How much control turns a franchisor into its franchisees' employer? B.C.'s top court weighs in
A grocery franchisor's grip on its independent store operators can be enough, on its own, to tie them together as a single employer for bargaining, even when those operators hold no control over one another. A provincial appeal court has now let that finding stand.
In reasons released July 24, 2026, the Court of Appeal for British Columbia, in a judgment written by Madam Justice Fisher, dismissed appeals brought by Sobeys Capital Incorporated and four FreshCo franchisees. The ruling leaves in place a Labour Relations Board declaration that the grocery chain and its franchisees are a common employer for the purposes of the province's labour code.
How a franchise rollout reached the labour board
Sobeys owns and operates Safeway grocery stores in British Columbia and franchises discount outlets under the FreshCo and Chalo! banners. In 2019, it signed franchise agreements with operators to run FreshCo stores in the province. That same year, the United Food and Commercial Workers International Union, Local 1518 asked the Labour Relations Board to declare Sobeys and the franchisees a single employer under section 38 of the Labour Relations Code.
The timing mattered. Before any FreshCo store had opened, Sobeys and the union had settled a collective agreement for the banner through arbitration in December 2018. The union argued a common employer declaration would preserve that existing bargaining structure rather than let the franchise model fragment it.
After an oral hearing that ran across many weeks between October 2021 and September 2022, the Board granted the union's application on July 6, 2023. It found Sobeys exercised what it described as "substantial control" over the franchisees. A reconsideration panel upheld that decision in June 2024, and Justice Marzari of the Supreme Court of British Columbia later dismissed the companies' petition for judicial review.
The control question at the heart of the appeal
On appeal, none of the companies disputed that Sobeys held enough control over each franchisee to be a common employer with each of them individually. Their argument was narrower. They maintained that section 38 also requires common control or direction among the franchisees themselves before all of them can be treated as one employer.
Justice Fisher gave the two kinds of control names. Control by the franchisor over the franchisees she called vertical control. Control among the franchisees she called horizontal control. The companies argued there was no evidence of horizontal control, and that without it the declaration could not stand.
The court did not accept that reading. Fisher J. found nothing in section 38 made the companies' interpretation the only reasonable one, and held the Board was entitled to treat the franchisor's control as sufficient. "The common control criterion had been satisfied by the finding of substantial control by Sobeys," she wrote.
Why the declaration survived review
Because the case arrived at the Court of Appeal through judicial review, the judges were not deciding the question fresh. They applied the deferential standard of patent unreasonableness, asking only whether the Board's decision was so flawed that it could not stand, not whether they would have reached the same conclusion themselves.
Fisher J. acknowledged that neither the Board nor the reconsideration panel had squarely addressed the horizontal control argument as part of the common control requirement. Even so, she found the reasons, read as a whole, showed the Board treated the franchisor's control as enough. She noted it was difficult to imagine one franchisee controlling another's operation within a franchise arrangement.
The panel dismissed all five appeals, leaving the common employer declaration in place. "I have concluded that the Reconsideration Decision was not patently unreasonable," Fisher J. wrote, with Justices DeWitt-Van Oosten and Gomery agreeing.
