Canada’s largest network of dental practices has obtained a B.C. Supreme Court injunction forcing a former “partner” to cease involvement with a fledgling franchise business, described in court documents as “something like a McDonald’s” of dentistry.
In a decision issued last week, Justice Ward Branch ordered Dr. Jasdip Minhas to stop buying, consolidating or managing two existing and any future dental clinics established through “Smili Dental” — a franchise model the long-time Prince George dentist invented in 2022.
The legal battle provides a window into the competitive and potentially lucrative business of dentistry — with industry giant Dentalcorp claiming that Minhas violated the terms of an $11-million contract with them when he launched Smili Dental.
That contract, signed in 2017, gave Dentalcorp ownership of Minhas’s five Prince George clinics, and prohibited him from being involved in any competitor clinic nearby.
‘Goodwill of a dental practice’
According to Dentalcorp’s website, the publicly traded company — valued at $1.9 billion — “acquires and partners with the country’s top dental practices to provide resources, support and technology to ensure they stay at the forefront of oral care in Canada.”
The company boasts 551 locations across Canada — but patients may not be aware their dentist is part of the chain.
According to an affidavit signed by Dentalcorp vice-president of operations Vikas Sharma, the company “typically retains the practice’s former owner to continue to operate the practice on a contract basis.”
“The benefits of this model … include a dental practice with a built-in client base, knowledgeable dental staff and, most importantly, the goodwill created by the former owner with their client base,” Sharma wrote.
“This goodwill of a dental practice is deeply connected to the former owner.”
According to Branch’s Nov. 1 ruling, the “professional goodwill” Dentalcorp purchased as part of the deal with Minhas included “existing telephone and fax numbers of the practice,” the trade name of the business and the email addresses of its patients.
Minhas stayed on to operate the clinics. His contract also included agreements that prevented him from engaging in any business that directly or indirectly competes with the clinics, within a 10-kilometre radius.
‘You’re really getting something like a McDonald’s’
The judge detailed a dispute that allegedly began with Minhas buying a clinic within the area covered by the non-compete clause — a purchase for which Minhas claimed a company official gave him the “green light.”
The new location later changed its signage to indicate it was part of “Smili Dental” — the concept Minhas came up with in 2022.
“It was a franchise model. Smili Dental would be the franchisor,” Branch wrote.
“The concept was that Smili Dental would help dentists find a location, start up their practice, and help them establish administrative and clinical systems.”
The court documents include the script of a video on Smili Dental’s website from franchise owner Dr. Jason Tao, who says the franchisor does “all the heavy lifting in terms of securing a location, locking down a lease, floor plans, systems and software.”
“So you’re really getting something like a McDonald’s,” Tao says in the video. “Where when you sign up, you know exactly what you’re getting.”
The ruling says Minhas claimed he told Sharma about Smili.
“Dr. Minhas says he asked Mr. Sharma if Dentalcorp would potentially sue him and Mr. Sharma responded: ‘No, we would never do anything like that,'” the judge wrote.
‘They notice right away’
Sharma saw things differently.
“Mr Sharma denies that he ever said any such thing,” Branch wrote.
“Mr. Sharma says he brought to Dr. Minhas’s attention the fact that this operation would be a business in competition with Dentalcorp, contrary to the agreements.”
Dentalcorp filed a civil claim against Minhas and a range of his associated companies on June 24, the same day the company gave him a termination notice alleging breaches of their contract.
In the termination notice — and the court documents — Dentalcorp claimed Smili was soliciting employees and patients from the clinics the company bought from Minhas and also claimed to have evidence that Smili was using Dentalcorp’s resources and confidential information.
The company also accused Minhas of badmouthing Dentalcorp in emails to his Smili partners.
“They want increases to our fee guide on codes that are covered under the ‘basic fee category,'” reads one email included in the court proceedings.
“The problem with this is many people have 100 [per cent] coverage or dual coverage on basic procedures. When we ‘nickel and dime’ them with [two per cent] increase on these codes, they notice right away.”
‘I was expressing genuine concerns’
In his affidavit, Minhas denied all of the company’s allegations.
He said he doesn’t believe he possesses any of Dentalcorp’s confidential information and said he “had no intention of soliciting patients from Dentalcorp.”
As for the emails, Minhas said “it was not my intention to ridicule or disparage Dentalcorp in my assertions about them. Rather, I was expressing genuine concerns about Dentalcorp’s conduct.”
The judge’s ruling concerns an application for an injunction to stop Minhas from engaging in business with Smili or its clinics, pending the conclusion of the lawsuit.
Minhas argued that the agreement he had with Dentalcorp at the time of his termination was essentially between an employer and an employee — whereas the company claimed they had a commercial deal, which Minhas allegedly violated.
The dentist said he believes he was wrongfully terminated. He also estimated that complying with an order to cease his involvement in Smili would cost him his initial $500,000 investment as well as the expense of associated legal claims.
Impossible to ‘unscramble the egg’
Branch sided with the company.
He found there was a possibility of “irreparable harm” if Minhas was allowed to continue his involvement in two existing Smili clinics in Prince George and Powell River and any future expansion.
“It may be impossible to ‘unscramble the egg’ following a trial in order to determine damages,” the judge wrote.
In a statement to CBC News, Dentalcorp said the company welcomes Branch’s decision.
“Dentalcorp has a duty to protect the interests of our network, patients and teams,” the company said.
“We had to respond when Dr. Minhas’s actions threatened to disrupt patient care and team stability at our Prince George clinics.”
A lawyer for Minhas did not respond to a request for comment.
None of the claims in the lawsuit have been proven in court.