The Ontario government has released highly anticipated draft regulations under the recently enacted Healthy Menu Choices Act (the “Act”) that clarify the Act’s menu labeling requirements. Still, uncertainties remain – for franchisors in particular.
The Act was passed on May 26, 2015, but it does not take effect until January 1, 2017. In the meantime, food service providers are well advised to take note of the Act’s requirements and prepare in advance.
Specifically, the Act is aimed at restaurant chains and other food service providers with 20 or more Ontario locations that operate under the same (or substantially the same) name and that offer the same (or substantially the same) food items.
However, part of the uncertainty for franchisors is the Act’s definition of a person who owns or operates a regulated food service premises, which is defined as “a person who has responsibility for and control over the activities carried on at a regulated food service premise, and 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.”
Thus, whether or not a franchisor may be liable under the Act turns on an opaque standard of how much responsibility and control the franchisor has over franchisee activities.
The recently released regulations help clarify the where, what and how of menu labeling.
What: Regulated food service premises must post calorie counts for each “standard food item,” which means a food or drink item sold or offered in standardized servings (portion and content). The regulations add that a standard food item must also be a “restaurant-type food or drink item,” defined as food or drink that is either served in, or processed and prepared in, a regulated food service premise, and that is intended for immediate consumption without additional consumer preparation before consumption. The regulations provide certain exemptions, such as for free self-serve condiments not listed on the menu.
Where: Caloric content must be posted on all menus, and “menu” is broadly defined. In addition to the traditional paper menu, online menus, menu applications, advertisements and promotional flyers all make the cut. However, the regulations provide exemptions for certain menus that do not list prices or standard food items available for delivery or take out.
How: The regulations also address how calorie information must be displayed, including where the calorie count must be in relation to the name or price of the standard food item, the font, format and size of the calorie count and other requirements. Menus must account for standard food items that come in different flavors, varieties or sizes, and provide calorie ranges or specific calorie counts for each different option, depending on the circumstances. Calorie counts can be determined in one of two ways: laboratory testing or by a nutrient analysis method. In either scenario, the person who owns or operates the regulated food service premise must reasonably believe the chosen method will provide accurate results.
Of course, this is just the tip of the iceberg when it comes to the details of the Act and its draft regulations. Experienced counsel can help food service providers determine if they are regulated by the Act and, if so, how best to comply with its requirements. While the draft regulations help illuminate the what, where and how of the Act, uncertainties remain – especially for franchisors. Under what circumstances franchisors may be liable for their franchisees’ violations of the Act is still an open question.