New consumer products legislation in Canada will have an impact on many franchise systems doing business in Canada. The Canada Consumer Product Safety Act (“CCPSA”) was passed on December 13, 2010, and received Royal Assent on December 15, 2010. Health Canada, the government agency responsible for oversight and implementation of the CCPSA, expects it will come into force in “a few months”.

The CCPSA will totally revamp the regulation of consumer products in Canada and franchisors need to consider what steps they need to take to ensure compliance.

The new CCPSA regulatory regime prohibits the manufacture, importation, advertising or sale of any consumer products that pose – or could be expected to pose – a danger to human health or safety. A danger to human health or safety means an unreasonable danger arising out of the normal and foreseeable use of the product.

Health Canada must be informed of an adverse event anywhere in the world regarding a consumer product that has resulted, or could have resulted, in death or serious adverse health effects, and/or of a recall or other measure initiated by a foreign government for human health or safety reasons. An initial report must be provided within 2 days of becoming aware of the event, with a follow-up report including proposed remedial measure within 10 days.

Inspectors under the CCPSA may enter any location, other than a private dwelling house, if they believe that a consumer product is manufactured, imported, packaged, stored, advertised, sold, labeled, tested, or transported on the premises, or if they believe the premises may contain documents relating to those activities. The Inspectors have broad powers of search and seizure under the legislation.

The Minister of Health is given broad powers to order a product recall, or any other measures that he or she believes are necessary to address or prevent a danger to human health or safety. If the event of non-compliance with the Ministerial Order, Health Canada may undertake enforcement measures at the expense of the non-compliant person.

Documents relating to the manufacture, import and distribution of a consumer product must be maintained for six years, and must be provided to Health Canada on request.

Penalties for breach of the CCPSA include fines up to $5 million and/or prison terms of up to 2 years.