Whose Responsibility Is It? Extended Producer Responsibility and Franchising

States are stepping up efforts to reduce waste and protect the environment, and one of the tools they are using is Extended Producer Responsibility, or EPR, laws.

At their core, EPR laws are about factoring the environmental costs of products into their price throughout the product’s life cycle. Food service brands are feeling this impact the most, mainly because of the packaging they use in their day-to-day operations.

Several states, including California, Colorado, Oregon, Maine, Minnesota, Maryland, and Washington, have already passed EPR laws. Other states, like Illinois, Hawaii, and Rhode Island, are studying the environmental impact from these materials before developing their own EPR programs. Under these EPR laws, “producers” of certain materials must register with an EPR authority, comply with reporting obligations, pay certain fees, and meet certain recycling obligations.

While franchisors may not typically manufacture materials subject to the EPR laws, they are not necessarily immune from compliance with these laws. Most laws put that responsibility on “producers,” but the definition of “producer” varies by state and may include business owners that place the product under their brand name in the market. Responsibility can fall on either the franchisor or the franchisee, depending on the state.

Franchisors may want to consider including a description of EPR laws in their Item 1 FDD disclosure and revising the franchise agreement if they want to reserve the right to pass EPR-related costs onto franchisees. However, the reservation of such rights may require additional disclosures in the FDD. This process may require a thorough review of current policies, procedures, and agreements to ensure everything is aligned with the evolving requirements.

Even if you are not in food service, it is worth thinking about how EPR laws could affect your system. These laws are changing quickly, and we will be keeping a close eye on developments and sharing updates as they happen.

Just as many of us will be watching the Olympics and cheering on gold medal performances, we will also be watching these laws evolve. Let us help you maintain a gold medal standard when it comes to compliance in this ever-changing landscape.