Following a consultation period in which the Ontario Government
sought input from stakeholders in the food service industry, a new
Regulation under the Healthy Menu Choices Act was published in the
March 19 issue of the Ontario Gazette. The Healthy Menu Choices Act
(the Act) will require regulated food service premises with 20 or
more locations in Ontario that are selling prepared ready-to-eat
food to post itemized caloric content on menus.
Cassels Brock addressed this new legislation and its potential
impact on restaurant and food service franchisors in previous
newsletters in May and October of last year.
The Act implicates franchisors by stating that an owner or
operator of a regulated food service premise "means 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...".
While the definition leaves open the possibility that a
franchisor is not always liable for compliance, the above reference
to responsibility and control (as opposed to ownership) leave open
the more likely possibility that the government intends for every
franchisor to be caught, as they arguably all exercise some measure
of control, and therefore may be open to prosecution.
The failure of the Regulation to elaborate on the meaning of
responsibility and control potentially leaves every franchisor
exposed to responsibility to ensure franchisee compliance, and
prosecution and liability if there is a failure by a franchisee to
comply. Accordingly, the ensuing liability under the Act may attach
to any franchisors with 20 or more corporate and/or franchised
outlets in Ontario as the Regulation may deem them to be an owner
or operator of those regulated food service premises even when they
are in fact not the owners.
Franchisors and franchisees are independent contractors. It is
reasonable to assume that each should be responsible for their own
acts or omissions, and government should not be imposing liability
on one person for the acts and omissions of someone else. Most
people in our society would see that as unfair, and not in keeping
with our traditions. That should apply equally to parties in an
independent contractor licensing arrangement. From this perspective
the Regulation is not helpful to the franchise community. However,
it is unfortunately becoming increasingly common for governments to
move in this direction.
The Act and its accompanying Regulation are intended to come
into force on January 1, 2017.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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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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