A private-company franchisee is required to hold shares of a public corporation under an escrow agreement under which it is prohibited from disposing of them, in order to be permitted to carry on its business under the public corporation's banner. Are such shares property used principally in an active business carried on by the corporation? CRA responded:
[W]e generally consider property to be used in a business if it is used principally in respect of that business, and is actually employed and risked in the business, which implies more than remote risk and more than the use of the asset for business purposes.
… [W]here a franchisor and a franchisee are at arm's length … the shares of the franchisor held by a franchisee could be considered to be used in the business operated by the franchisee, to the extent that the subscription is a condition of membership under the banner, and the shares are pledged as security to the franchisor to secure the obligations of the franchisee.