Federal Employment Minister Jason Kenney also suggested criminal charges could result against the owner if he lied on the original application to employ temporary foreign workers.
"I suspended both the labour market opinions and the work permits that that employer has been using pending the outcome of the investigation," said Kenney. "And we've blacklisted that employer as well as two others that we believe have abused the program."
Kenney said penalties for such a prosecution include up to five years in prison and fines reaching $100,000.
The Canada Border Services Agency could lay charges under the Immigration Act, he said.
The two other employers cited for alleged foreign worker program abuses are The Boathouse Restaurant in Fenelon Falls, Ont., and Jungle Jim's Restaurant in Labrador City, N.L., Employment and Social Development Canada said in a statement.
The Temporary Foreign Worker Program has been under increased scrutiny after it was revealed companies were bringing in large numbers of foreign workers, which critics claimed were displacing Canadian workers.
The Harper government has since backtracked on changes it made to the program, including allowing businesses to pay foreign workers up to 15 per cent less than the average wage for a job.
The government also announced earlier this year that it planned to impose hefty penalties by 2015 for employers who abuse the program.
McDonald's Western Canada spokesman John Gibson said the restaurant chain has had a pristine record until now when it comes to employing temporary foreign workers. He said moves are already underway to remove the current Victoria franchise owner and run the three franchises through head office.
Gibson said most McDonald's franchises are operated on an 80-per-cent franchisee-owned and 20-per-cent company-owned basis, but the three downtown Victoria outlets will now be 100-per-cent McDonald's operated.
He said the three restaurants will remain open.
"We are in the process of taking ownership back," said Gibson. "It's basically new ownership taking over and that new ownership would be McDonald's Restaurants of Canada."
He said the future employment status of the temporary Victoria workers would involve the federal government, but Gibson suggested at the moments there will be "no changes in the short-term."
A woman who answered the telephone at Nasib Services Inc., in Victoria, identified by Employment and Social Development Canada as the McDonald's franchise owner in Victoria, hung up when a reporter called.
Statistics provided by McDonald's stated there are 155 employees at the three Victoria restaurants. There are 129 domestic employees and 26 foreign workers at the three outlets.
In British Columbia, McDonald's employs 343 temporary workers, less than four per cent of the chain's B.C. workforce. McDonald's stated that of the more than 85,000 people working at their restaurants across Canada, about 3,400, or four per cent of their total workforce, are temporary foreign workers.
McDonald's said in a statement that its goal is always to hire local workers first. McDonald's stated it plans to hire 6,100 new employees this year.
B.C.'s Jobs Ministry Shirley Bond said there are about 75,000 temporary foreign workers employed in the province, with about 3,100 of those are employed in the restaurant industry.
Bond said she supported the federal government's swift action with regards to the Victoria McDonald's restaurants.
"There should be no abuse of the Temporary Foreign Worker Program and if there is there needs to be consequences applied very quickly," she said. "I think that's what Jason Kenney did today."
Ian Tostenson, B.C. Restaurant and Food Services Association president, said a growing worker shortage in B.C., despite double-digit unemployment among young people, has restaurants seeking skilled food services workers elsewhere, especially those with cooking skills.
But Tostenson said there can be no tolerance for abuse among restaurant owners.
"We're not in the business of getting into trouble," he said. "Treating the people who work for you the right way and responsibly is key. If you've got a bunch of disgruntled people that doesn't work so well."
Some estimates suggest the number of temporary workers in Canada doubled in seven years to about 340,000 as of December 2012. The biggest growth came in the years following the 2008-09 recession, when hundreds of thousands of Canadians were out of work.