Canada: Franchise And Distribution @ Gowlings - January 13, 2010

Last Updated: January 27 2010

Edited by Debi Sutin and Peter Snell


  • Food Labelling and Trans Fat Restrictions Proposed for Restaurant Operations
  • Price Maintenance Provisions of Competition Act Decriminalized
  • Who, What, Where and When

Food Labelling and Trans Fat Restrictions Proposed for Restaurant Operations
By: Adrian Visheau

A private member's bill which would make significant changes to nutrition regulation in Ontario is currently before the provincial Standing Committee on Social Policy. Bill 156, also known as the Healthy Decisions for Healthy Eating Act, has passed first and second reading in the Legislative Assembly. The bill's aim is twofold: to ensure that consumers are able to make well-informed decisions when purchasing food in restaurants and to restrict the amount of trans fats in restaurant menu items.

Specifically, the proposed new law would require restaurant operators to post detailed calorie information for all food and beverage items sold from the restaurant's premises. This information would be required to be posted either on the menu, or on a display board adjacent to the price, or on a tag attached to the individual item. This calorie information can not be in a font size smaller than the font size used for the price.

Regarding the proposed restrictions on trans fats, two standards are to be applied depending upon the presence of certain ingredients in the food items. For foods, sauces, spreads, garnishes, or condiments, the trans fat content is to be restricted to 2% of the total fat content. Essentially, this means that restaurants will have to ensure that any margarine, oil or shortening used in preparing these items has a trans fat content of 2% or less. For foods, drinks or other items containing partially hydrogenated oils, the trans fat content is to be restricted to 5% of the total fat content. Foods which contain trans fats only from "naturally occurring sources" will be exempt from these restrictions.

The bill applies to all "food service premises" where food is sold for immediate consumption, and which have a gross annual revenue of over $5 million, either directly or through a franchise system. This means that many franchised restaurant operations will be impacted by the requirements under the proposed new law.

Not surprisingly, the bill has already generated a considerable amount of controversy. The most vocal criticism has come from the restaurant industry, particularly through the Canadian Restaurant and Foodservices Association ("CFRA") which has called the bill a "huge step backwards". It has emphasized that restaurant owners – and restaurant chains in particular – have already taken major steps to better inform their customers about the nutritional content of food items, and that the industry as a whole has been striving to reduce the amount of trans fats voluntarily. Furthermore, the CFRA has suggested that federal, rather than provincial, regulation governing trans fats would be more appropriate to permit greater control over the entire food supply chain.

There appears to be significant broad based support for the bill among health practitioners and the scientific community. The Ontario Public Health Association argues that Bill 156 will benefit both consumers and businesses insofar as it "creates a climate for healthy business competition among service providers by engaging them in providing healthier options for consumers and increasing consumer confidence in the industry". As well, the Center for Science in the Public Interest has come out in strong support of the bill, noting that it represents a "sound, cost effective proposal to improve the health and economic productivity of Ontarians, protect the financial sustainability of the Ontario Health Insurance Plan, and facilitate informed consumer choice and health-protection using tried and true policies."

As of mid-November, the Standing Committee on Social Policy had not yet issued a report and no transcripts of committee debates regarding this bill had been released. Accordingly, it is too early to speculate if the bill will be passed, and if it is passed, when it would be proclaimed into law. Members of Gowlings' Franchise and Distribution Law Practice Group will be following the committee's activities on this bill and can be contacted for updates on the status of the proposed new law.

Price Maintenance Provisions of Competition Act Decriminalized
By: Ian Macdonald

Recent amendments to Canada's Competition Act have decriminalized the price maintenance provisions. As a result, franchisors may have more flexibility to influence franchisee pricing. In particular, except where doing so could have an "adverse effect on competition", franchisors will be better able to influence the price at which their franchisees sell, offer to sell or advertise products.

Prior to the amendments, it was per se illegal (meaning that the effect of the conduct on competition was irrelevant) to:

  • by agreement, threat, promise or any like means, attempt to:
  • influence upward, or discourage the reduction of, the price at which a person supplied, offered to supply or advertised a product within Canada; or
  • induce a supplier as a condition of doing business, to refuse to supply a product to a particular person or class of person, because of their low pricing policy; or
  • refuse to supply a product to, or otherwise discriminate against, a person because of their low pricing policy.

Price maintenance is now a civil reviewable practice, rather than a criminal offense, meaning that it is presumptively lawful unless and until it is proven to have an adverse effect on competition.

The Competition Bureau or an affected person may attempt to prove to the Competition Tribunal that the relevant price maintenance conduct has had, is having, or is likely to have an adverse effect on competition. If the Competition Tribunal agrees, its remedy powers are limited to granting an order to cease and desist the price maintenance conduct and/or to cause the supplier to supply the product within a specified time to those persons to whom it had previously refused to supply. There will be no fine, jail sentence, administrative monetary penalty or damages award.

This is not to say that franchisors have nothing to lose by engaging in price maintenance, as defending a challenge may entail considerable expense and adverse publicity, even if the franchisor is ultimately successful in the proceedings. However, franchisors who are prepared to accept these risks now have more flexibility to influence franchisee pricing than they did prior to the amendments.

As of January 2010, there is no case law or Competition Bureau guidelines to assist in determining how the amended provisions will be administered and enforced. However, if the Competition Tribunal considers the same factors that U.S. courts have considered in deciding recent price maintenance cases under U.S. law (and we believe that it likely will, at least to some degree), then it will take into consideration the following:

  • Whether the manufacturer/supplier/franchisor or a dealer/retailer/franchisee have market power (over 35% market share). If a manufacturer/supplier/franchisor lacks market power, then it is less likely that a price maintenance policy implemented by that manufacturer/supplier/franchisor will have an adverse effect on competition;
  • Whether price maintenance policies are commonly used in the industry. Price maintenance policies will generally be more carefully scrutinized if many competing manufacturers/suppliers/franchisors engage in price maintenance; and
  • Whether the price maintenance policy originates with the manufacturer/supplier/franchisor or with the dealer/retailer/franchisee. An adverse effect on competition is more likely to be found in situations where a price maintenance policy results from pressure applied by dealers/retailers/franchisees.

Franchisors are strongly encouraged to consult legal counsel before implementing a price maintenance policy. Among other things, caution needs to be taken to ensure that a price maintenance policy does not contravene the criminal provisions of the Competition Act relating to horizontal agreements between competitors, amendments to which come into force on March 12, 2010.

If you would like further information on these recent amendments, please contact any member of Gowlings Franchise and Distribution Law Practice Group.

Who, What, Where and When

  • Len Polsky, Ned Levitt, Debi Sutin and Peter Snell will be attending the International Franchise Association's Annual Convention February 5-8, 2010 in San Antonio Texas.
  • Ned Levitt and Len Polsky have both been selected to facilitate Business Solution Roundtables at the IFA Convention.
  • Peter Snell's article on Social Media and IP Risks will be published in an upcoming issue of the Franchise and Distribution Law Journal
  • Debi Sutin has joined the Convention Program Committee for the 2010 Canadian Franchise Association National Convention, to be held in Mont Tremblant, Québec, May 2 – 4. 2010
  • Ned Levitt's article "What Does the Franchise Agreement Reveal About the Franchisor" will be published in the December issue of Canadian Opportunities Magazine

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.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
8 Nov 2016, Seminar, Ottawa, Canada

The prospect of an internal investigation raises many thorny issues. This presentation will canvass some of the potential triggering events, and discuss how to structure an investigation, retain forensic assistance and manage the inevitable ethical issues that will arise.

22 Nov 2016, Seminar, Ottawa, Canada

From the boardroom to the shop floor, effective organizations recognize the value of having a diverse workplace. This presentation will explore effective strategies to promote diversity, defeat bias and encourage a broader community outlook.

7 Dec 2016, Seminar, Ottawa, Canada

Staying local but going global presents its challenges. Gowling WLG lawyers offer an international roundtable on doing business in the U.K., France, Germany, China and Russia. This three-hour session will videoconference in lawyers from around the world to discuss business and intellectual property hurdles.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.