The Canadian Franchise Association (CFA) recently successfully advocated for a change to Ontario's proposed menu labelling law, with significant benefit to food service franchisors with locations in the province, by reducing their potential liability. Bill 45, Ontario's proposed Making Healthier Choices Act, 2015 is a proposed law requiring food service establishments to post the caloric content of standard food and drink items if the establishment is part of a chain with a minimum of 20 locations in Ontario.
The Bill, as originally drafted, purposefully defined franchisors of food services establishments as "owners and operators" and, as such, made franchisors liable for franchisee compliance with the legislation. In seeking that this language be removed, CFA representatives appeared before the Standing Committee on General Government at the Ontario Legislature to voice concerns about the definition. Among the representatives making submissions was Larry Weinberg, Chair of the CFA's Legal & Legislative Affairs Committee and Chair of the Franchise Law Group at Cassels Brock & Blackwell LLP.
The CFA's submissions focused on the aspects of the Bill that applied to franchising. Specifically, the Bill as proposed did not accurately represent the nature of the franchisor-franchisee relationship, thereby exposing franchisors to liability if their franchisees do not act in accordance with the proposed legislation. Further, the definition of franchisor undermined the independent nature of the franchisor-franchisee relationship in the franchise business model. The CFA identified the roles of the franchisor and franchisee and why the definition as proposed was incorrect and should be removed.
On April 28, 2015, the Standing Committee, with members of all political parties in the Ontario legislature, voted in favour of the proposed amendments to the Bill's reference to franchisors. The Bill will go forward with new language that is more accurate, correcting the definition of franchisors as "owner and operators."
The CFA's efforts began months ago with the goal of ensuring that the franchise business model is not undermined. The CFA's submissions further warned of the implications of passing the proposed legislation without the recommended amendments, given the importance of franchising to the Ontario economy. The CFA made clear the mistake of imposing on the franchisor increased potential liability than is reasonable, as it makes franchising a less attractive method of doing business.
Bill 45 must still undergo Third Reading and a vote by all Members of Ontario's Provincial Parliament before becoming law. Cassels Brock will keep track of the progress of this legislation.
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