Here is a recent legislative development of interest that will impact the franchise community, at least in Ontario: the Making Healthier Choices Act, 2015, which received Royal assent on May 28, 2015. Note that the act comes into force on Jan. 1, 2017.
The act requires that “owners and operators” of “regulated food service premises” display the number of calories of every “standard food item” that is sold or offered for sale on the premises. A “standard food item” is defined as a food or drink item sold or offered for sale in servings that are standardized for portion and content.
Labelling is also required if a combination of standard food items is sold or offered for sale as a combo meal, and with respect to each variety, flavour and size of standard food items sold or offered.
A “regulated food-service premise” is defined as a food-service premise that is part of a “chain of food service premises.” A “chain of food service premises,” in turn, means 20 or more food service premises in Ontario that operate under the same or substantially the same name, regardless of ownership, and that offer the same or substantially the same standard food items.
The specific application of the act to franchisors is awkwardly worded. Subsection 1(2) of the act states: “a person who owns or operates a regulated food-service premise means a person who has responsibility for and control over the activities carried on at a regulated food service premise, and may include a franchisor, licensor … manager …” [emphasis added].
Is it open for a franchisor to rebut the presumption that the franchisor owns or operates the premises in question? As we all know, it is the essence of a franchise system that the franchisor in fact does not own or operate individual locations — that is the purview of the franchisee. However, the safe bet is that the franchise or license agreement in question provides sufficient control to satisfy this definition, and that all franchisors and licensors should consider themselves bound by the act.
It is also noteworthy that the act imposes personal liability on directors and officers of corporations that own or operate regulated food-service premises. Fines can amount to $1,000 for every day or part day during which the offence under the act occurred or continued. Fines applicable to corporate owners and operators amount to $5,000 for every day or part day on which the offence occurs or continues and, in the case of a second or subsequent offence, the fine is increased to $10,000 per day.
Product labelling legislation has, of course, been around for several years with respect to pre-packaged foods sold in Canada. These items are regulated under the federal Food And Drug Regulations. However, the federal regulation exempts most foods sold in restaurants and food-service establishments, as well as foods ordered for take-out and delivery.
It’s unfortunate that the act exempts independent and smaller chains from compliance. Obviously, customers of those locations would benefit equally from access to the same kind of nutritional information. The rationale for the exemption, as explained in the debates surrounding the act, centre on the cost of obtaining nutritional analysis — a service that will no doubt become something of a cottage industry.
Not surprisingly, the Ontario legislation followed an initiative of the U.S. Food and Drug Administration, which introduced a similar federal nutritional disclosure law in the United States in 2010 (which came into force in 2014). British Columbia also introduced its Informed Dining Program in 2011, which creates a voluntary program for the disclosure of nutritional information.
Given the lemming-like behaviour of provincial governments on matters related to franchising, one wonders how long it will take before similar labelling requirements become law in other Canadian provinces, or whether the federal Parliament will see fit to make this a law of national application? Time will tell.
This articlie was orginally published on AdvocateDaily.com.