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British Columbia's high court condemns fraudulent vending machine franchise

May 1, 2014

The sale of a vending machine franchise in British Columbia, Canada, has been condemned as fraudulent by the B.C. Supreme Court, and the seller has been ordered to pay damages totaling C$435,093 (U.S.$396,786) to the purchaser.

In June 2010, Harry Ma paid Brian Thurston of Nutriview Systems a fee of C$414,375 and acquired the right to operate Nutriview's vending machine business in several schools in the Coquitlam School District in B.C.

Thurston said he planned to implement remote monitoring and corporate sponsorships for the vending machines. However, these benefits were not in the contract and did not materialize, the B.C. Supreme Court said in a ruling.

The Court described the agreement as "an entirely improvident bargain." Ma was gullible and naïve, the court said, and he had the ability to access over C$400,000 to invest in the franchise. "Gullibility, naiveté and the ability to raise a large amount of money are an unfortunate combination," it said.

The Court described Thurston as a skilled salesman who managed to convince Ma to pay a grossly inflated amount of money for a vending machine business with locations in several schools in the Coquitlam School District. He did so by making a series of statements to Ma that were untrue. He then presented a contract which contained none of his promises or representations, but contained a clause purporting to deny contractual effect to all his promises.

The law does not protect Ma from entering into an improvident bargain, and the parties to a franchise agreement are entitled to act in their own self-interest, the Court said. "But they must deal honestly and reasonably with each other," it said.

"To summarize, I have found the defendants Mr.Thurston and Nutriview engaged in fraudulent misrepresentation," B.C. Supreme Court Judge Stephen Kelleher said in a statement.