Q&A with Frank Zaid: Legal issues and food-service franchises

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

A: 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 come into consideration. This article updates an earlier article that discusses this subject.

Food establishment regulations in Ontario

By way of example, in Toronto there are detailed municipal and provincial regulations relating to food establishments. The City of Toronto’s food premises inspection and disclosure system, DineSafe, requires all food establishments to:

1. Meet or exceed all of the requirements and standards in the Ontario Food Premises Regulation 562 made under the Health Protection and Promotion Act, and
2. Comply with the requirements under Toronto’s Municipal Code 545-Licensing.

All food premises operators in the province must follow specific requirements. The Ontario Food Premises Regulation specifies the minimum standards for food temperatures, handling, sanitation, dishwashing, and personal hygiene practices. This regulation must be followed in any establishment where food or milk is manufactured, processed, stored, handled, displayed, distributed, transported, sold, or offered for sale, excluding private residences.

The act also 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.

As of January 2001, Toronto’s Municipal Code 545-Licensing requires eating and drinking establishments (i.e. every place where food items intended for human consumption are made for sale, offered for sale, stored, or sold) to do the following:

• Post the food safety inspection notice in an obvious place clearly visible to members of the public, at or near the entrance of the establishment;
• Post the Toronto eating or drinking establishment licence next to the food safety inspection notice;
• Produce copies of the Toronto Public Health Food Safety Inspection Reports relating to the currently posted disclosure notice for the establishment when requested by any person;
• Notify the Toronto Municipal Licensing and Standards Division if there is a change in the management or control of the establishment; and
• Notify the Toronto Municipal Licensing and Standards Division of any change or changes to the operation of the business that may result in “risk classification changes,” at least 30 days prior to the change.

Again, in Toronto, by way of example, municipal and Ontario laws apply to a restaurant’s washrooms.

Toronto’s Municipal Code—629 requires restaurants and other retail establishments to ensure washroom facilities for customers are accessible and proper signage is provided. Any establishments larger than 300 m² (3229 sf) or with an occupancy load of more than nine people must provide separate, accessible male and female washrooms. Those smaller than 300 m² or with an established occupancy load of nine people or less must provide at least one washroom that can be used by 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 by-law, however, 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, in Toronto, is administered by the city’s Public Health Division. The act requires washrooms to be kept clean, sanitary, and in good repair at all times, among other detailed rules.

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 include in their franchise disclosure documents all permits and licenses required for the operation of their franchise 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.