On February 17, 2015, the Legislative Assembly of Ontario resumed its debate of Bill 45, the Healthy Menu Choices Act, 2014 (the “Act”). The Act was introduced on November 24, 2014, as part of the province’s strategy to reduce childhood obesity and overall healthcare costs.
If passed, the Act will require “[e]very person who owns or operates a regulated food service premise”, which includes food service providers that belong to a chain of 20 or more locations in Ontario, to display the caloric information of their “standard food items”. The Act will apply to restaurants, grocery stores, and other establishments that sell food or drinks prepared for immediate consumption on the premises or elsewhere. Penalties for breaching the Act range between $500 and $10,000 per day, depending on whether the person liable is an individual or corporation, and whether the breach is a first-time offence.
Unfortunately, despite the clear separation of ownership between franchisors and franchisees, the Act appears to treat franchise networks as single entities by including “franchisors” in the definition of “a person who owns or operates a regulated food service premise.” As a result, all franchisors with 20 or more franchise locations in the province will likely be impacted by the proposed legislation. For example, with differing regional requirements, franchisors will need to consider whether to implement menu labelling at their Ontario locations only, or more widely. Moreover, franchisors may find themselves faced with heightened operating costs, since compliance with the Act may require increased attention to supply chains in order to ensure consistency with displayed caloric information across franchise locations. Lastly, franchisors will need to be aware of the possible risk of liability. As currently drafted, the Act seems to impose liability on franchisors for their franchisees’ failure to comply, although this point remains unclear. Franchisors will want to take this possible risk into account when negotiating franchise agreements and developing franchise policies.
While specific to Ontario, the proposed legislation will have implications across Canada and internationally. All affected food service providers will want to begin familiarizing themselves with the Act and take action accordingly.