The Ontario Superior Court of Justice has issued a significant ruling in a dispute between global franchisor Keller Williams Realty and two of its former major Ontario franchisees1. The decision, handed down on December 19, 2025, by Justice Kurz, grants an interlocutory injunction that prevents the former franchisees from operating under the banner of a direct competitor, Royal LePage, for the remainder of their original contract terms. This legal battle centers on the enforceability of non-competition clauses within franchise agreements and the high bar required for a franchisee to claim that a franchisor has fundamentally breached a contract.
The litigation involves Keller Williams Realty and its subsidiary, Rellek Publishing Partners, as plaintiffs against several defendants, including VIP Realty Inc. in Ottawa and Associates Realty Solutions Inc. in Mississauga. The individual defendants, Marvin Alexander and Sunil Daljit, are prominent figures in the Canadian real estate industry. Mr. Alexander, a former Canadian director for the Keller Williams system, operated the Ottawa franchise, while Mr. Daljit managed the Mississauga market centre. Both men had long-standing relationships with the Keller Williams brand, having entered into their original license agreements in the mid-2000s and later renewing those agreements for terms that were set to run until 2028 and 2031, respectively.
The conflict reached a breaking point on June 24, 2025, when the defendants issued a termination notice to Keller Williams, asserting that the franchisor had repudiated their agreements. Immediately following this notice, the brokerages rebranded as Royal LePage Integrity Realty in Ottawa and Royal LePage Real Estate Associates in Mississauga. They redirected their websites and announced the changes on social media, effectively moving approximately 600 real estate agents from the Keller Williams system to Royal LePage. Keller Williams responded by seeking an injunction to stop this move, arguing that the defendants were in clear breach of the restrictive covenants in their license agreements.
In his analysis of the case, Justice Kurz first had to determine the appropriate legal standard for granting an injunction. Typically, a plaintiff only needs to show there is a serious issue to be tried. However, the defendants argued that because the requested injunction would effectively force them out of business or back into a relationship they no longer wanted, a higher standard should apply. The judge agreed, noting that the relief sought amounted to a mandatory injunction that would restore the status quo. Consequently, Keller Williams was required to demonstrate a strong prima facie case, meaning a high likelihood of success at trial based on the evidence presented.
The defendants justified their departure by alleging that Keller Williams had committed a fundamental breach of the license agreements, thereby discharging the franchisees from their obligations. Their arguments were categorized into four main areas: territorial encroachment, the franchisor’s failure to restrain competing agents, the alleged illegality of the Keller Williams profit-sharing system under Canadian tax law, and a general loss of value in the franchise system.
Regarding the Ottawa territory, Mr. Alexander claimed that in 2016, he was promised exclusivity for the entire city of Ottawa in exchange for saving the local franchise after a major defection to a competitor. He argued that Keller Williams breached this promise by approving another agent, Ruby Xue, to open a market centre in Ottawa. However, the court found that the written license agreement clearly defined a much smaller geographic area as the awarded territory. Furthermore, the contract contained an entire agreement clause, which stipulated that the written document represented the full agreement between the parties. Justice Kurz noted that despite Mr. Alexander’s claims of an oral promise, he had renewed his license agreement in 2019 without ensuring the expanded territory was included in writing. The court also observed that Mr. Alexander had known of Keller Williams’s refusal to recognize his city-wide exclusivity since 2022 but had waited over two years to take action.
In Mississauga, Mr. Daljit argued that Keller Williams had violated the exclusivity of a satellite business centre. The court reviewed the evidence and found that the exclusivity was conditional on meeting specific performance targets, including agent counts and sales units. The evidence showed that the Mississauga franchise had failed to meet these targets for several years. Moreover, Mr. Daljit admitted during cross-examination that he had eventually closed the business centre and was using the space for storage. The court concluded that Keller Williams was within its rights to withdraw exclusivity after the performance conditions were not met.
One of the more complex arguments raised by the defendants concerned the Keller Williams profit-sharing model. They alleged that the system violated Canadian tax laws because it did not account for Harmonized Sales Tax (HST) on profit-sharing payments. The defendants claimed they had discovered potential liabilities for hundreds of thousands of dollars in unpaid taxes. Justice Kurz dismissed this argument as speculative, noting that the defendants had not been audited by the Canada Revenue Agency and had failed to provide expert evidence to support their claims. The judge stated that the responsibility for tax compliance generally rested with the individual brokerages as sophisticated business entities, and there was no evidence that Keller Williams had acted improperly or that the system was inherently illegal.
The court also addressed the defendants’ claim that the Keller Williams system had lost all its value in Canada. Justice Kurz found this assertion to be contradicted by the defendants’ own financial success. Evidence showed that since 2010, the Ottawa franchise had seen a 389 percent increase in listings sold, while the Mississauga franchise saw a 549 percent increase. The judge also pointed to recent transactions where the defendants had purchased additional shares in their brokerages at significant valuations, as well as the fact that they had actively used Keller Williams’s branding and training materials to recruit agents right up until the day they left. The court noted that if the system truly had no value, a competitor like Royal LePage would likely not have paid the defendants significant sums to switch brands.
The defendants further challenged the non-competition clauses as being too broad and ambiguous to be enforced, specifically targeting the phrase “engage in” any competing real estate business. They argued this could theoretically prevent a former franchisee from working in any capacity, even as a janitor, for a competitor. The court rejected this interpretation, finding that when read in context, the clause clearly referred to actively participating in the business of a real estate brokerage. Justice Kurz highlighted that the individual defendants were sophisticated businessmen who had previously enforced similar or even broader restrictive covenants against their own employees and in other business sales.
In determining whether Keller Williams would suffer irreparable harm without the injunction, the judge found that the loss of two major franchises and 600 agents to a direct competitor constituted a significant blow to the franchisor’s market share and goodwill. The court accepted the argument that if franchisees were permitted to ignore their contracts and move their entire operations to a competitor without consequence, the integrity of the entire franchise system would be undermined. Justice Kurz noted that such harm is often impossible to quantify in purely monetary terms.
Finally, the court weighed the balance of convenience. The defendants argued that an injunction would deprive them of their livelihood and force them into an untenable business relationship. However, the judge concluded that the defendants were the authors of their own misfortune by choosing to unilaterally breach their contracts. The court found that the balance tilted in favor of Keller Williams, especially given the strength of the franchisor’s legal position.
As a result of these findings, the court granted the interlocutory injunction. The defendants are now prohibited from operating competing real estate brokerages for the duration of their original license agreements. The parties were encouraged to resolve the issue of legal costs between themselves, with the court providing a schedule for written submissions should they be unable to reach an agreement.
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