What are the Legal Requirements to Open a Restaurant?

Legal & Compliance Consulting

Dreaming of opening your own restaurant? Time to grab that chef’s apron and make it happen! Whether it’s comfort food or gourmet creations, your culinary journey starts here. Of course, opening a restaurant involves more than just walking in, firing up the grill, and garnishing plates with steaks, salads, and soufflés. 

There’s a lot of planning involved and essential steps to take before opening a restaurant. But don’t be alarmed—this book will guide you from start to finish on how to tick off all the boxes so that your restaurant debut is a success. 

The first step requires you to understand and comply with various federal, provincial, and municipal legal requirements. These vary by province (which we’ll cover later), but a few legal elements apply to restaurants across Canada, including yours. 

Establish Your Business Structure and Registration

To start, you must decide what business structure you want to incorporate. There are three options: 

• Sole proprietorship—A business owned and operated by one person, with no legal distinction between the business and the owner. 
• Partnership—A business arrangement where two or more persons share management duties, profits, and liabilities. 
• Corporation—A legally separate corporate entity owned by shareholders, capable of owning assets, incurring debt, and existing indefinitely. 

Each structure has pros and cons, which you should discuss with a business lawyer or consultant. 

Once you choose a business structure to incorporate, the next step is registering your business. That means consulting with provincial or territorial authorities and obtaining a Business Number (BN) from the Canada Revenue Agency. 

Obtain the Necessary Business Licenses, Permits, and Inspections

Next, it’s time to get licensed. It doesn’t matter if you have Michelin-star culinary talent or a high concept for your restaurant; you can’t operate without the right licenses and permits. 

In Canada, there are seven must-have licenses and permits needed to open a restaurant:

• Business License—This basic license, which authorizes you to open a restaurant, is issued by your local municipality. 
• Food Service Establishment Permit—You need this permit to prepare and serve food. To obtain it, you must submit floor plans, menus, and food safety plans and undergo inspections by your local public health department. 
• Liquor License—If you plan to serve alcohol, you must acquire a liquor license from your provincial liquor control board. 
• Health and Safety Inspections—You must comply with your local public health authorities, who will conduct regular inspections to ensure your establishment complies with health and sanitation standards.
• Building Permits—You will need to obtain building permits from your local building departments if you plan to renovate 
• Fire Safety Inspection—This ensures your restaurant complies with fire codes and regulations. 
• Music and Entertainment Licenses—This license is optional, but it's obligatory if you plan to offer live music or entertainment. 

Employer Obligations

If you’re operating a one-person hot dog stand or ice cream truck, you can probably skip this section. But if you plan on hiring employees, you’ll need to do the following:

• Ensure your restaurant complies with employment standards legislation.
• Follow worker safety regulations.
• Obtain necessary insurance coverage.

Insurance Requirements

You need to obtain the appropriate insurance coverage for your restaurant and staff. This includes coverage for the following:

• Property damage
• Liability claims
• Accidents involving customers or staff

Zoning and Location Compliance Laws

Your restaurant must comply with the following mandated laws:

• Local zoning bylaws
• Land-use regulations
• Building code requirements

These rules and regulations are non-negotiable. 

Additional Considerations for Opening Your Restaurants

While this won’t apply to every restaurant, you may need to consider some of your restaurant's features. For example, if you plan on having:

• Outdoor patios
• Signage installations
• Valet parking services

These features all require additional permits. 

Intellectual Property Protection

Lastly, trademark your restaurant name, logo, recipes, and menu—intellectual property is not something to take lightly. 

Imagine spending years perfecting a recipe, or coming up with a brilliant dish or restaurant name based on your family heritage or a special theme, only for someone else to use it (and perhaps misrepresent it). 

Strongly consider trademarking all brand elements—after all, they give your restaurant its identity.