Ontario's Proposed Healthy Menu Choices Act, 2014

The Ontario government has proposed new legislation that will affect the food services industry. The Healthy Menu Choices Act, 2014 (the "Act") was introduced as part of Bill 45 in the fall of 2014. The Bill reached second reading on December 3, 2014. If passed, the Act will require food service providers to display the caloric content of the food items they sell.

Specifically, the Act will mandate owners and operators of regulated food service premises to display on their menus, menu boards and flyers the number of calories of every standard food item sold or offered for sale. Every affected owner or operator must also post one or more signs at the premises that "contain any caloric and other nutritional information" that may be prescribed by regulation. Where standard food items are on display, the Act requires the caloric content to be listed on labels or tags identifying the items. Standard food items are defined for the purposes of the Act as food or drink items sold or offered for sale in servings that are standardized for portion or content. Food service providers subject to the Act will have to display the caloric content for each variety, flavour and size of standard food item on their menu. If standard food items are sold as a combination meal, the caloric content of the combination meal must also be displayed.

The Act as currently written applies to chains of food service providers with 20 or more locations in Ontario that operate under the same or substantially the same name, regardless of ownership, that offer the same or substantially the same standard food items. The Act would apply not only to restaurant chains but any chain of outlets where meals or meal portions are prepared for immediate consumption or sold or served in a form that will permit immediate consumption on the premises or elsewhere. Such premises would include convenience stores, service stations, grocery stores, and coffee shops, as well as entertainment venues such as movie theatres and amusement parks.

At present, the Act only requires the display of caloric content. However, the display of additional information could be required by regulation. The Act also empowers the Lieutenant Governor in Council to make regulations that exempt food and drink items from the definition of standard food items and which exempt certain owners and operators from compliance with the Act. As no draft regulations have been published, it is unclear what other food service premises may be caught by the Act or what food or drink items may be exempted from its application.

Nor is it clear what categories of owners, operators or other persons, if any, will be exempt. As it stands, the Act defines "a person who owns or operates of regulated food service premise" to include franchisors, licensors, persons who own or operate such establishments through subsidiaries, and managers. Although franchisees are not expressly included in that definition, the structure of the legislation implies that franchisees, the actual food providers, will be subject to its requirements along with their franchisors.

The Act also provides for compliance and enforcement. The Minister of Health and Long-Term care is empowered to appoint inspectors who may, without warrant, enter and inspect a regulated food premise or any business premises of a company that owns, operates, franchises or licenses regulated food premises to determine compliance. Records and "any other thing that is relevant to the inspection" can be removed from the premises for review and copying and staff and other persons can be questioned on relevant matters. Persons who have custody of records or other items requested to be produced have an express obligation to comply with such a request and to "provide any assistance that is reasonably necessary to interpret the record or to produce it in a readable form." In addition, no person can hinder, obstruct or interfere with an inspection, refuse to answer questions on matters relevant to an inspection or provide false or misleading information on such matters.

Lastly, the Act imposes penalties on individuals and corporations for contraventions of the Act's provisions or of any regulation that may be promulgated under it. In the case of individuals, the penalty is $500 per day for a first offence and $1,000 per day for a second or subsequent offence. The penalty for corporations found in breach is $5,000 per day for a first offence and $10,000 per day for second and subsequent offences. Directors and officers of corporations are under a duty to take all reasonable care to ensure that the Act and regulations are complied with. A failure to do so could result in personal liability.

The Act is squarely aimed at promoting healthier eating habits for Ontarions and reflects a growing trend towards healthier lifestyles in general. It follows the 2010 law passed by the United States Congress that similarly requires chains of 20 or more outlets to post the caloric content of what they serve on their menus. British Columbia has also introduced a voluntary program under which participating restaurants provide nutritional information to their customers in an easy access format. Each of these initiatives is designed, at least in part, to address the increased incidence of health issues such as obesity and diabetes that have been linked to fast food, pop and the like.

It remains to be seen if and when the Act or any associated regulations will be passed into law. If passed in its current form, it appears that it is the intention of the legislature to impose upon franchisors the burden of enforcement at the retail level by potentially holding them liable for the failures of their franchisees to meet the Acts requirements. Thus, franchisors in the food services and entertainment sectors, as well as their counsel, should develop a plan to accommodate that eventuality and, if necessary, amend their disclosure documents and franchise agreements accordingly.

This is a brief outline and one of a series of articles designed to assist franchisors in understanding some of the issues faced by them. Careful planning, coupled with expert legal and financial advice, is essential to ensure the success of any franchise system. Mr. David Kornhauser, one of the lawyers behind the website www.franchisingforum.ca, provides advice franchisors about franchise law to in Toronto, Ontario or elsewhere across Canada. You can reach Mr. Kornhauser either at 855-324-3944 or david@franchisingforum.ca.

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