New Menu Law Impacts Franchises

The federal Patient Protection and Affordable Care Act, signed into law March 23, 2010, includes a provision that creates a national, uniform nutrition-disclosure standard for restaurants. This articles discusses the impact on franchises in the restaurant industry.

Along with the federal Patient Protection and Affordable Care Act came a new federal law requiring that any restaurant chain with greater than 20 units must display calories for each of their standard menu items. This new law becomes mandatory in 2012.  The law will preempt local, county and state ordinances that are in place in California, New York City and Philadelphia, among others. The question becomes, how will this effect franchisors and franchisees in the restaurant industry?

Franchisors will need to ensure that all of their franchisees are in compliance with the new law.  The federal law simplifies standards across the country, thereby making it easier for franchisors to ensure compliance with the laws.  Prior to the federal law, a franchisor may have to be concerned with understanding the laws of various municipalities, such as New York City and Philadelphia, which may vary greatly in their requirements.  Since the new federal law preempts any local and state regulations, compliance is easier to govern.

Franchisors will incur costs in order to comply with the new regulation – developing calorie counts for the menu items, changing advertising, etc.   In addition, once calories are known, it is possible that consumers may change their eating habits, requiring franchisors to develop new menu listings and new strategies.

Franchisees may find the new law quite costly and burdensome.  Franchisees will need to replace all menus and menu signs with compliant menus showing the calories in their items, among other things.

The law provides lenience in the method of calculating calories requiring that the calculation be based on a “reasonable basis”.  This basis can include cookbooks, nutrient databases or laboratory studies.

This post is not intended to provide legal advice nor create an attorney/client relationship.  For specific answers to you questions, please contact us at 215-525-1165.

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