Earlier this year, the Legislative Assembly of Ontario resumed
its debate of Bill 45, an act aimed at enhancing public health by
enacting, among other statutes, the Healthy Menu Choices Act, 2015
(the "Act"). If passed, the Act will require every person
who owns or operates a regulated food service premise to display
the caloric information of their standard food items. Corporations
contravening the Act will be subject to a fine of not more than
$5,000 for every day on which the offence occurs or continues and,
for a second or subsequent offence, to a fine of not more than
$10,000 for every day on which the offence occurs or continues. The
proposed legislation, as originally drafted, raised concerns among
franchisors due to the express inclusion of "franchisor"
within the definition of "a person who owns or operates a
regulated food service premise". A summary of this issue can
be viewed in our
previous blog post.
Franchisors and franchisees are separate legal entities, and
their respective responsibilities for the operation of a franchise,
including compliance with local laws, are in general governed by
the terms of their franchise agreement. The previous definition of
"a person who owns or operates a regulated food service
premise" would have potentially held franchisors liable for
the acts of franchisees even where the parties had contractually
agreed otherwise thus undermining the independent nature of the
franchisor-franchisee business relationship.
On April 28, 2015, the Standing Committee on General Government
voted to amend the Act's reference to franchisors. The revised draft of the proposed legislation
amends the definition of "a person who owns or operates a
regulated food service premise" to mean "a person who has
responsibility for and control over the activities carried on at a
regulated food service premise", which "may include a
franchisor" (emphasis added). The revised definition reflects
the intention that liability should rest with the person or entity
who in fact has control over the franchise operation and not
necessarily the franchisor.
Bill 45 has been ordered for third reading by the Legislature
and, if passed, will be enacted into law on January 1, 2017.
Franchisors and franchisees operating in Ontario should review the
Act and their franchise agreements and consider the implications
for their businesses prior to this date, including the extent to
which the franchise agreement confers an obligation on the
franchisor to be responsible for and control the activities of a
Under the Income Tax Act, the Employment Insurance Act, and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions or GST.
Under the Income Tax Act, the Employment Insurance Act, the Canada Pension Plan Act and the Excise Tax Act, a director of a corporation is jointly and severally liable for a corporation's failure to deduct and remit source deductions.
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