On February 24, 2014, Ontario’s minority Liberal government introduced Bill 162, Making Healthier Choices Act, 2014. If passed, the legislation would require restaurant chains and other food service providers with 20 or more locations operating under the same or substantially the same name in Ontario to display the number of calories of all standard food or drink items on their menus, menu boards, displays and on one or more signs. This would include not only quick service restaurants, but also convenience stores, grocery stores or other businesses which sell meals prepared for immediate consumption either on the premises or elsewhere.
Franchisors should take note that the legislation specifically includes a franchisor of a restaurant chain or other food service provider in the definition of a “person who owns or operates a food service premise” that is caught by the legislation. While the manner in which the definition is drafted creates some uncertainty on this point, the inclusion of franchisor in the definition of “person who owns or operates a food service premise” may mean that if the legislation is passed both the franchisor and its franchisee could be found liable for failure to display the number of calories of all standard food or drink items on their menus, menu boards, displays and on one or more signs. The practical result of this liability structure will depend on the particular franchise system, but could prove troublesome for franchisors that do not have or want complete control over the supply chain.
Bill 162 follows from an announcement on October 9, 2013 that the Ontario government would begin consultations regarding the introduction of legislation that would require large chain restaurants to place caloric and other nutritional information on their menus and menu boards. As part of these consultations, the Ontario government indicated that the legislation would be aimed at helping parents and their children make healthier food choices by putting calories on menus and menu board and creating a more accessible and transparent food industry. The Ontario government has indicated that if Bill 162 is passed the legislation could take effect as earlier as January 1, 2015 and food service premises would be given six months to comply.
If Bill 162 becomes law, the legislation would require the display of the number of calories of each variety, flavour and size of food and drink items that are offered with standardized portions and content and any “other information” required by the regulations with respect to such food and drink items. The Ontario government has yet to introduce draft regulations so it remains to be seen what “other information” will need to be displayed. We do know, however, that the number of calories and other information must be displayed on one or more signs, each menu where the standard food item is listed, and, if the standard food item is on display, on the label or tag identifying the standard food item. The information must be specific to each variety, flavour and size offered.
Penalties for non-compliance have been set for corporations at $5,000 for each day on which there is non-compliance for a first offence and a fine of up to $10,000 per day for any second or subsequent offence. Liability is extended to directors and directors of a non-compliant corporation where such director or officer fails to take all reasonable care to ensure the legislation is complied with. The penalties for non-compliant individuals are set at $500 for each day on which there is non-compliance for a first offence and up to $1,000 per day for a second or subsequent offence.
It should also be noted that on December 5, 2013, the NDP introduced a private member’s bill titled Bill 149, Health Statute Law Amendment Act (Healthy Decisions Made Easy), 2013, which was referred to the Standing Committee on the Legislative Assembly on February 20, 2014. While the objectives of Bill 149 appear to be similar to those of Bill 162, the legislation has some notable and arguably troublesome differences for franchisors. In particular, Bill 149 casts a wider net of application by lowering the threshold of the number of locations operated in Ontario to five (5) with gross annual revenue of over $5 million dollars and by not requiring that the locations operate under the same or substantially the same name. Further, unlike Bill 162, which focuses on standard food or drink items, Bill 149 also requires the display of the number of calories of each variety, flavour and size of all food and drink items and brochures to be made available that contain nutritional information and an indication of high and very high sodium levels of all food and drink items, including all varieties, flavours and sizes.
With rumours of a spring provincial election in Ontario looming, it is too early to say whether the legislation will become law. However, both the Liberal and NDP parties appear committed to the issue of helping Ontarians make healthier food choices by mandating the posting of caloric and other nutritional information in the food service industry. If passed, the legislation is likely to have a significant impact on franchising in Canada. Franchisors should take action now to review their systems and develop an action plan for compliance in the event the legislation is passed.