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Fast Food Franchisees and Workers Gather in Sacramento, Clash Over California’s FAST Recovery Act

With franchisees worried about menu price increases, franchisors worried about joint employer liabilities and workers worried about wage theft, the controversial California bill is making waves in the franchising industry.

As California’s Assembly Bill 257 or the FAST Recovery Act moves through the state legislature, fast-food restaurant franchisees, franchisors and workers are all taking a stand and making their opinions heard. 

The bill, which state Assembly members have already approved, aims to give California fast-food workers and unions more influence over wage rates and workplace standards by establishing a council composed of QSR employees, franchisees and corporate brands, as well as government workplace regulators. The 11-person committee would have the authority to draft state labor standards for fast-food restaurants, including decisions around workers’ pay, schedules and safety regulations every six months. 

“Imagine cooks, cashiers and janitors sitting around the table with owners, franchisees and government officials to set fair standards for pay, hours and working conditions across California’s entire fast food industry,” Mary Kay Henry, president of the Service Employees International Union (SEIU), said in a statement earlier this year.

How it Will Impact Franchisees

This past week, about 100 franchisees gathered at the capitol in Sacramento to try to get state senators to vote the bill down as part of a campaign named Stop AB 257.

Many small business owners are expressing concern because of a fear that this bill could result in rising menu prices if it becomes law. The franchisees in Sacramento pointed to recent International Franchise Association (IFA) research that predicted a 20% jump in food prices if the California Senate passes the FAST Act, due in large part to the historic inflationary pressures that have hit many parts of the economy.

“Despite record inflation, franchise brands and owners have avoided increasing prices to deliver on their promise of value for customers,” said International Franchise Association President and CEO Matt Haller in a press release. “The FAST Act would be the straw that breaks the camel’s back due to price increases upwards of 40 percent.”

How it Will Impact Workers

Many fast-food workers, on the other hand, are adamantly for the bill, arguing that the FAST Act would protect them from employer abuse, including wage theft and sexual harassment. Several workers also gathered in Sacramento this past week to sway senators to vote for the bill. 

“With AB 257, we would have a more dignified job,” Angelica Hernandez, an activist with the Fight for $15 campaign and long-time McDonald’s employee, told Vox. “We would finally have a voice and have a place where we can make sure that we are setting better standards. It’s sad because we work in a free country, but we’re not free in our job to speak out.”

How it Will Impact Franchisors

Franchisors in California are primarily concerned about how the AB-257 bill would result in them being considered joint employers, meaning they would share accountability for an individual franchisees’ violation of labor standards. 

The joint employer discussion has been a point of contention for several years in franchising, with franchisors arguing that it could result in a heightened liability and upend the traditional franchise model, resulting in franchisees becoming employees of a corporation instead of being independent, small-business owners.

“The Fast Act is one of the most damaging pieces of legislation to ever impact the franchise business model,” Jeff Hanscom, the IFA’s vice president of state and local government affairs, said in a statement earlier this year. “It will have disastrous impacts to the thousands of franchise restaurants across the state and effectively dismantle the business model.”

Assembly Bill 257 must be voted on by Aug. 31. 

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