Brownco Inc. v. The Queen, 2008 DTC 2591, 2008 TCC 58 -- summary under Subsection 256(5.1)

The taxpayer was subject to the de facto control of the holder of ½ of its shares ("Bost") given that under the unanimous shareholder agreement between BOST and the other 50% shareholder (the "USA"), the board was to consist of one director nominated by each shareholder, a nominee of Bost was to be the Chairman, and in the event of a tie of votes, the Chairman was entitled to cast the deciding vote. The franchise exception in s. 2056(5.1) did not apply as the USA was not similar to a franchise agreement (it did not deal with providing the trade name used by Bost to the taxpayer, it did not contain any clauses dealing with the granting of a licence or a lease of property or a distribution or supply of any product, it did not specify how tasks were to be accomplished or how the business of the taxpayer was to be conducted, and instead dealt with matters between the two shareholders) and the fact that the taxpayer and Bost were not dealing at arm's-length was evidenced by the fact that the taxpayer provided a guarantee of Bost liabilities without receiving anything in return.