Food premises requirements on a change of owner in Ontario

In Ontario, neither the provincial Act nor its food premises regulation sets out a food premises licence or permit for a buyer to take over. The provincial rules for food premises sit in the Health Protection and Promotion Act and in O. Reg. 493/17 under it, and the local public health unit applies them. A buyer who is used to hearing that a restaurant needs a food premises licence should read those texts first. They are framed around notice, operation, standards and inspection. This guide explains what the Act and the regulation actually say, what they leave open when ownership changes, and what a buyer should confirm with the health unit before closing.

The duty is framed as notice of intention

Section 16(2) of the Act says every person who intends to commence to operate a food premise shall give notice of that intention to the medical officer of health of the health unit in which the food premise will be located. Section 5 of the regulation adds that the notice shall include the person’s name, contact information and the location of the food premise. Section 16 speaks of notice rather than a permit. The text does not say that a sale of the business, or a change of owner, triggers the duty. Whether a buyer is a person commencing to operate is a question to put to the health unit and your lawyer in writing, before you rely on any assumption.

Who counts as the operator

The Act defines an operator, in relation to a food premise, as a person who has responsibility for and control over an activity carried on at the food premise. That definition follows control rather than title, which matters in a purchase. If the buyer takes over the activity at closing, the buyer is the one with control. If the buyer instead buys the shares, the company that operated before still operates, but the people who control it have changed. The Act does not say what a health unit must be told in that second case. Ask the health unit what, if anything, it expects when the people in control change but the operating entity does not.

Duties that attach to whoever operates

Section 16(1) requires every person who operates a food premise to maintain and operate it in accordance with the regulations, and section 16(4) requires an operator to furnish the medical officer of health with the information the medical officer of health requests about the preparation, storage, handling, sale and distribution of food at the premise, among other activities. The regulation then adds specific duties. Section 6 requires an operator to ensure the results of inspections are posted in accordance with the public health inspector’s request. Section 32 requires every operator of a food service premise to ensure that at least one food handler or supervisor who has completed food handler training is on the premise whenever it operates, and the Ministry of Health’s guidance repeats that a certified food handler must be on site every hour of operation.

Changes to the premises after you buy

A buyer who intends to renovate should read section 24 of the regulation. It says no operator shall alter the floor space, or the number of toilets or washbasins, in a sanitary facility without first receiving approval in writing from a public health inspector, subject to an exception for licensed meat plants and milk plants. A rebuilt washroom or a relocated handwashing sink planned for the weeks after closing therefore needs approval first. Section 13 of Ontario Regulation 493/17 (Food Premises) requires pest control records to be kept for at least one year after they are made, and section 29 of that regulation requires food purchase records to be kept on the premise at least until the first anniversary of the purchase date, so ask the seller for the retained records and check that they exist, because they show how the premise has been run.

Reading the inspection record

Section 6 ties posting to the inspector’s request, so check how the health unit for the premise discloses results. Toronto Public Health, for example, runs DineSafe, which lets anyone search inspected establishments by name and address and shows outcomes such as Pass, Conditional Pass and Closed. If the premise sits in another health unit, look at how that unit discloses results and ask the seller for copies of recent inspection reports and any orders. A closure or outstanding order on the premise is a fact about the premise itself, and it should be visible to you before you remove your conditions rather than after.

• Write to the local health unit and ask how it treats a change of owner, an asset sale and a share sale for the purposes of section 16(2).
• Ask the seller for inspection reports, orders and any written approvals from a public health inspector.
• Confirm who will hold the food handler certification the regulation requires on every operating hour.
• Check whether the municipality or other bodies require their own licences or approvals, since those rules are outside this guide.
• Make the closing conditional on any confirmation the health unit gives, and keep it in writing.

There is more on the wider approvals picture in the guide to licences and permits in an Ontario business sale.