::this post ID is 14377::::in categories of ..Food Services....Legal Corner..::

Q&A with Frank Zaid: Preparing for legal issues specific to food-service franchises

By Frank Zaid
Q: Are there any legal issues specific to running a food-service franchise and, if so, how can a new franchisee prepare for them?

There are a number of legal issues specific to running any food-service business, some of which have particular importance to franchises. The legal regulation of food-service operations is complex—federal, provincial and municipal laws apply in various ways—and the interests of both the franchisee and the franchisor must be considered.

Restaurant washrooms
In Toronto, by way of example, both municipal and Ontario’s provincial laws may apply to the configuration of a restaurant’s washrooms.

Chapter 629 of Toronto’s Municipal Code, which addresses property standards, requires restaurants and other retail establishments to ensure washroom facilities for customers are accessible and proper signage is provided. Any establishments larger than 300 square metres or with an occupancy load of more than nine people must provide separate, accessible male and female washrooms. Those smaller than 300 square metres or with an established occupancy load of nine people or less must provide at least one washroom that can be used by both male and female customers. Signs with universal ‘male’ and ‘female’ symbols are required at the entrance to each washroom, while directional signs must be prominently displayed at customer service counters, attendant stations or cash register areas.

This bylaw, though, does not apply to restaurants with capacity to seat more than 30 people. These establishments are governed by Ontario’s Health Protection and Promotion Act, which contains additional requirements and, in Toronto, is administered by the city’s public health division. The act requires their washrooms to be kept clean, sanitary and in good repair at all times, among other 
detailed rules.

(The same Ontario act contains a specific section addressing building maintenance. All food premises must be operated and maintained such that they are free from every condition that may be a health hazard, adversely affect the sanitary operation of the premises or adversely affect the wholesomeness of food therein.)

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Several provinces have enacted legislation regarding the diversion of restaurant waste.

For franchisees, the time and resources required for approving restaurant layout plans in compliance with municipal and provincial legislation and receiving permits can be very frustrating. And while provincial franchise legislation requires franchisors to disclose all permits and licences required for the operation of their business, it is unclear whether this means (a) they must research each municipality where they offer franchises or (b) it is adequate to make a general statement.

Nutrition labelling
On May 26, 2015, the government of Ontario passed Bill 45, the Making Healthier Choices Act. As of Jan.1, 2017, restaurant chains, convenience store systems and other food-service providers with 20 or more locations operating under the same (or substantially the same) name within the province will need to display the number of calories in each variety, flavour and size of menu items—including food and drinks—offered with standardized portions and content. The prescribed information must appear on one or more signs, on each menu where the standard items are listed and, if the actual item is displayed, on that food’s label or tag.

Originally, this legislation designated franchisors as operators of restaurants and responsible for individual franchisees’ compliance, but the wording was later revised after consultation with the franchising sector. Now, the act defines the owner or operator as a “person who has responsibility for and control over the activities carried on at the regulated food-service premise,” which “may include a franchisor, a licensor, a person who owns or operates a regulated food-service premise through a subsidiary and a manager of a regulated food-service premise,” but “does not include an employee who works at a regulated food-service premise but is not a manager.”

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