Saskatchewan judge orders Vern's Pizza location to stop using the name after franchise feud

Saskatoon Vern's Pizza loses franchise feud WATCH: Vern's Pizza in Saskatoon's Sutherland neighborhood has been ordered to stop using the Vern's name and recipes.

A judge has ordered the Vern's Pizza in Saskatoon’s Sutherland neighbourhood to stop using the Vern's name after finding its franchise agreement expired in 2016.

In a recent King’s Bench decision, Justice Michael Tomka found the operator of the restaurant breached its franchise agreement and the Trademark Act.

Tomka ordered the franchisee "to cease and permanently refrain from carrying on business as a Vern’s Pizza at the Central Ave location."

The restaurant has until Sept. 30 to follow the judge's order.

Brothers Wayne and Kelly Shutyr operate the restaurant, according to court documents.

The Shutyrs entered into a franchise agreement with Vern's Pizza Company Ltd. in 2000, to run two restaurants — Central Avenue and 8th Street East.

In August 2016, the 8th Street location closed because the landlord sold the building. The lease was terminated.

Court documents say "the franchisor attempted to find possible alternative locations" for the second restaurant.

Without a second store open, Vern's Pizza told the Shutyrs their agreement was over.

The brothers continued to operate the Sutherland location.

In December 2016, Tim Burns, owner of the Vern's Pizza franchise, wrote a letter to the Shutyrs.

"Even though the term of your franchise agreement has ended, you have continued to carry on business and pass yourself off as a Vern’s Pizza business," the letter reads.

"You are using our proprietary and intellectual property without right to do so. This includes but is not limited to unauthorized use of our name, trademarks, recipes and goodwill."

In a responding letter, the Shutyrs' lawyer, disagreed the franchise agreement had ended.

The franchisee argued that both locations would operate as separate businesses, and the agreement would only end if the lease at both locations ended.

The franchise agreement had a "drafting issue," according to court documents. The pizza franchise did not fill out the addresses that would be used for the restaurants.

Still, the judge sided with Vern's. The end to the 8th Street lease, also ended the term of the franchise agreement, the judge ruled.

"Given my finding that the term of the franchise ended upon the loss of the lease at the 8th St location and given the franchisee has been continuously operating at the Central Ave location as it always had, I find the franchisee was in breach of the franchise agreement and the Trademark Act," Tomka wrote in his decision.

Amid the dispute, the Shutyrs continued to make their five per cent royalty payments to Vern's Pizza Company Ltd. — totalling $247,051 between September 2016 and October 2022.

"The franchisor has continued to accept royalties ... which fully compensates them for the use of the trademarks and thus, no actual damages have been proven to arise from franchisee’s actions," a judge ruled.

Tomka ordered the Shutrys to continue to pay royalties until Sept. 30, 2024.

"I am of the view no further compensation beyond these payments should be awarded," the judge ruled.

There are currently 12 Vern's Pizza locations in Canada, including seven in Saskatchewan, three in Alberta and two in Winnipeg.