As a franchisor with franchised units in Ontario, you may have been contacted by Stewardship Ontario with respect to your obligation to register as a “steward” under Ontario’s Waste Diversion Act. Stewardship Ontario was created to ensure that certain companies that introduce packaging and printed paper into the Ontario consumer marketplace share in the funding of "blue box" recycling programs.

Thousands of companies that produce or distribute packaged goods and printed paper for sale in Ontario are required to pay fees to offset the cost of the Ontario municipal Blue Box program.

Since the program was introduced in 2002, Stewardship Ontario has sought to notify various organizations which it believes may be designated Stewards under the Blue Box Rules. Once notified, you will be required to make payments on your generated waste from the start of the program in 2002. However, even if you have not been not notified, you are obligated to voluntarily register if you are resident in Ontario and your annual revenue and the amount of waste generated meet the prescribed criteria for registration, although penalties are imposed only if you have failed to register 90 days after having been notified. Franchisors are specifically named as Stewards under the Blue Box Rules and will be required to register if they are deemed to be resident in Canada. Having franchisees in Ontario will not alone deem an otherwise non-resident franchisor to be an Ontario resident. Environmentally-conscious non-resident franchisors may elect to voluntarily register as Stewards under the program.

The franchisor of a franchise system, operated partly or wholly in Ontario, which generates annual revenues greater than $2 million is required to register as a Steward and is obligated to report packaging and printed paper generated in Ontario by all of its franchisees. Note that the annual revenues are those of the franchisor and all of its franchisees combined. However, if the franchisor is not resident in Ontario, its franchisees may be designated as Stewards and may be required to register and comply with the Blue Box Rules.

The fees payable by each Steward are determined based upon the tonnage and type of waste generated, and in the case of a franchise system, is the combined total of the packaging and printed paper waste generated by the whole system.

Franchisors obligated as Stewards can choose to pay these fees themselves or can require each franchisee to contribute a portion of the fees to be paid under the Blue Box program. If the franchisees are required to contribute or to themselves register as a Steward, these requirements should be disclosed in the franchise agreement and in the franchisor’s Ontario disclosure document. Failure to comply with the registration and payment obligations will not only attract enforcement action by Stewardship Ontario but could render your Ontario disclosure deficient.

It is also worth noting that the Blue Box Rules, payment schedule and table of fees are subject to change by Stewardship Ontario on an annual basis. A franchisor’s franchise agreement and disclosure document should reflect that a franchisee’s obligation for payment of these fees may vary over the life of their franchise agreement.