1851

Franchisees in California are on edge about the future of their businesses after Governor Gavin Newsom recently signed into law a new bill that will increase wages for fast-food workers across the state.<a href="https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=202320240AB1228&utm_source=1851franchise.com&utm_medium=article&utm_campaign=californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state-2724051" target="_blank" rel="nofollow">Assembly Bill 1228</a>, also known as the Fast Food Franchisor Responsibility Act, is set to take effect on April 1, 2024. The legislation, which applies to fast-food franchises with a minimum of 60 locations nationwide, ushers in a minimum wage hike of $20 per hour and establishes the highest guaranteed base pay in the industry across the country. The wage increase would also surpass California’s current minimum wage of $15.50.Additionally, the bill calls to establish a council that has the power to increase the new minimum wage for employees annually until 2029, potentially raising it by 3.5% each year.Newsom hailed the bill as a major milestone but controversy has since surrounded its implementation. A key point of contention is the lack of genuine representation for franchisees during the bill’s formulation.<a href="https://www.linkedin.com/in/keith-miller-a42a5853/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state-2724051" target="_blank" rel="nofollow">&nbsp;Keith Miller</a>, who serves as the public policy director for the American Association of Franchisees &amp; Dealers, voiced his concerns in an interview with<a href="https://www.franchisetimes.com/franchise_news/franchisees-felt-left-out-in-california-legislative-deal/article_90209638-6c6a-11ee-b604-6bc046b391ce.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state-2724051" target="_blank" rel="nofollow">&nbsp;Franchise Times</a>.“The groups I work with are most upset over the fact there wasn’t true franchisee representation in the room, yet they will bear the cost of it,” Miller told the outlet. “I understand there were a couple franchisees in the room, but they were handpicked by a franchisor.”The International Franchise Association (IFA) has also<a href="https://www.franchise.org/media-center/press-releases/new-california-joint-liability-bill-will-destroy-local-franchised?utm_source=1851franchise.com&utm_medium=article&utm_campaign=californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state-2724051" target="_blank" rel="nofollow">&nbsp;strongly opposed the legislation</a>, arguing that it could spell disaster for local franchised restaurants. The IFA claims that 92% of franchised restaurant owners<a href="https://www.nrn.com/news/california-state-assembly-passes-fast-food-franchisor-responsibility-act?utm_source=1851franchise.com&utm_medium=article&utm_campaign=californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state-2724051" target="_blank" rel="nofollow">&nbsp;disapprove of the bill</a>, fearing it could strip away their independence, paving the way for corporate control and increased government intervention.“This bill will destroy tens of thousands of local restaurants by eliminating the equity they have built over decades of franchise small business ownership,” said<a href="https://www.linkedin.com/in/matthewhaller/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state-2724051" target="_blank" rel="nofollow">&nbsp;Matthew Haller</a>, IFA president and CEO. “The franchise business model has afforded millions of people the opportunity to pursue the American dream, especially people of color, women, immigrants and other underrepresented communities. This bill will take away their independence and the livelihood they have dedicated to their business, their employees, and the people they serve — making them simply employees of their brand. Franchising is one of the greatest avenues for upward mobility, generational wealth creation and first-time business ownership, which stands to all be taken away so organized labor can grow their ranks.”The National Owners Association (NOA), representing over 1,000 McDonald’s franchise owners, also<a href="https://www.accesswire.com/766246/McDonalds-Independent-Franchisee-Association-Strongly-Opposes-California-AB-1228?utm_source=1851franchise.com&utm_medium=article&utm_campaign=californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state-2724051" target="_blank" rel="nofollow">&nbsp;condemned the bill</a> for having “draconian” rules. According to the NOA, 95% of the 1,300 McDonald’s restaurants are locally owned and operated by small business owners who would find it impossible to absorb the new costs. They estimate that the bill could result in an annual financial blow of<a href="https://www.foxbusiness.com/politics/mcdonalds-franchise-group-slams-california-fast-food-law-draconian?utm_source=1851franchise.com&utm_medium=article&utm_campaign=californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state-2724051" target="_blank" rel="nofollow">&nbsp;$250K per McDonald’s restaurant</a>.Adding to the concerns, the NOA suggested that the legislation could set a precedent for other states, which in turn, could potentially further squeeze franchisees’ profit margins and make it even more difficult for them to sustain their businesses.As franchisees prepare themselves and their businesses for the impending changes, the fast-food industry in California is entering uncharted territory. With tensions and uncertainty running high, the true impact of AB 1228 on the Golden State’s franchise landscape remains to be seen.&nbsp;&nbsp; &nbsp;

California’s New Fast-Food Bill Sparks Concerns Among Franchisees in the State  

1851 Franchise

New bill AB 1228 mandates an employee wage hike of $20 per hour at fast-food franchises, leading to fear of increased costs and a threat to small business viability. 

californias-new-fast-food-bill-sparks-concerns-among-franchisees-in-the-state

HomeTeam Inspection Service

Good Day Columbus: Home Insurance Expert Reveals Why Central Ohio Premiums Are Rising and How to Combat Costs

rising-home-insurance-costs-ohio

CapitalSpring

Primetime Fitness Expands Crunch Portfolio With CapitalSpring’s Backing

primetime-fitness-expands-crunch-portfolio-with-capitalsprings-backing

Children's Lighthouse

How Children’s Lighthouse Franchisees Scale to Multiple Locations

how-childrens-lighthouse-franchisees-scale-to-multiple-locations

Express Employment Professionals

Betting on Himself: How Chris Brown Built an Express Employment Professionals Franchise From the Ground Up

betting-on-himself-how-chris-brown-built-an-express-employment-professionals-franchise-from-the-ground-up

Comfort Keepers

Comfort Keepers® Named One of America’s Best Home-Care Providers

comfort-keepers-named-one-of-americas-best-home-care-providers

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Potbelly to be Acquired by RaceTrac in $566 Million Deal 

racetrac-acquires-potbelly-in-566-million-deal

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities - 1851 Franchise Agg

Health Care Hiring Slowdown Highlights In-Home Care Franchise Opportunities 

health-care-hiring-slowdown-in-home-care-franchise-opportunities

Caribou Coffee Names Scott Kennedy CEO, Eyes Continued Growth

caribou-coffee-names-scott-kennedy-ceo-eyes-continued-growth

McDonald’s Launches New Extra Value Meals as Consumer Demand for Value Continues to Climb

mcdonalds-launches-extra-value-meals

Power Eats: Smoothie King Rolls Out Food Nationwide To Fuel Franchise Growth

smoothie-king-food-menu-power-eats

Technomic Releases Annual Ranking of the Top 15 Fast-Food Chains in the U.S.

technomic-releases-annual-ranking-of-the-top-15-fast-food-chains-in-the-us

"Come in, We're OPEN" sign against abstract background

Small Business Optimism Dips, Raising Concerns for Franchise Owners

small-business-optimism-dips-raising-concerns-for-franchise-owners

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

Franchisee spotlight graphic with photo of Ricki Oberoi and Layne's Chicken Fingers logo

Multi-Unit Wendy’s Operator Signs 12-Unit Deal With Layne’s Chicken Fingers

ricki-oberoi-laynes-chicken-fingers-growth

DevHub - Meet the Supplier - 1851 Franchise

DevHub: Scalable Digital Marketing for Franchises and Multi-Location Brands

devhub-meet-the-supplier

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

1851 Franchise Deep Dive graphic with Sparkle Squad logo

Sparkle Squad Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-sparkle-squad-franchise-costs-fees-profit-and-data

Design with school-aged child standing on pencil with text "Education Franchises" and "<$500K"

Top Education Franchises Under $500K To Explore in 2025

top-education-franchises-under-500k

California’s New Fast-Food Bill Sparks Concerns Among Franchisees in the State

MORE STORIES LIKE THIS