2014.03

Calorie Counts to be Mandatory for Ontario Franchises

By: Derwin Wong

As the first of its kind in Canada, the Ontario government has proposed legislation to make it mandatory for calorie counts to be shown prominently on menus in foodservice establishments and grocery stores. If passed, the legislation could take effect as soon as January 1, 2015 and restaurants would be given 6 months to comply. Given that the proposed law only affects restaurants with at least 20 locations operating under the same name, it is clearly aimed at most of the established franchised restaurant systems in Ontario.

The government’s stated rationale behind the new law is to reduce childhood obesity and to help consumers make healthier food choices.  That said, it remains unclear whether calorie counts will actually accomplish this.

If the real objective is to educate people to make better choices in nutrition, a breakdown of the ingredients and/or a listing of the composition of sodium, sugar, fats, carbohydrates, and proteins may be more beneficial to the informed consumer.  Not all calories are equal, and it may be misleading without this additional information.  Many large franchisors already provide calorie and nutritional information to its customers on a voluntary basis, but the new law would require them to print the calorie counts on their menus and menu boards.

Research on calorie-posting has also produced mixed results, including a 2009 study that found customers of four fast-food chains in New York City actually bought food with slightly more calories than average after the city made calorie posting mandatory.  Agreements are also in place in the provinces of British Columbia and Manitoba for large restaurant chains to voluntarily provide calorie information, but there is no evidence of any reduction in the obesity rates in those provinces.

Despite the questionable effectiveness of the policies, any restaurant or other food establishment that fails to comply with the new law in Ontario would be exposed to a maximum penalty of $10,000 per day for each offense after the first.
Unfortunately, the race to legislation in Ontario seems haphazard and piecemeal from a national perspective, much like the evolution of the inconsistent provincial franchise laws in Canada.  There should be a national strategy or initiative from all provincial governments since overall good health is important to all Canadians.  From a cost and logistical standpoint, a cohesive national framework would also be helpful to franchisors in developing a single consistent policy, as opposed to different policies for different provinces.

Whether the proposed legislation will achieve its goals is uncertain, but it is undoubtedly the trend for foodservice establishments to make nutritional information available to its customers.  In addition, while the new law only targets the larger franchised foodservice providers, smaller franchised and independent restaurants may indirectly face pressures to voluntarily follow suit and compile this information for its customers to remain competitive in the marketplace.

For more information on franchising, contact Derwin Wong by phone at (416) 368-0600 or by email at dwong@businesslawyers.com.

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