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What the FAST Act Could Mean for Franchising
The recently passed bill, which would give fast-food workers and unions more say on wage rates and workplace standards, also aims to label franchisors and franchisees as joint employers.
The Fast Food and Accountability and Standards Recovery Act — the FAST Act — advanced in California this week after being passed by the California State Assembly. The bill aims to give California fast-food workers and unions more influence over wage rates and workplace standards, primarily by including them in an 11-person committee that would have the authority to draft state labor standards for fast-food restaurants.
The panel would include two fast-food workers; two representatives of a union or other labor advocacy group; one individual from a restaurant franchisor; another from a restaurant franchise; and five representatives of various state regulatory agencies.
“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. “It’s an absolute game-changer for reducing income inequality and how we treat fast-food workers in this state.”
Notably for fast-food franchise concepts in California, the bill would also legislate that franchisors and franchisees be considered joint employers, which means they would share accountability for the licensees’ 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 turn businesses off from the franchise model.
The International Franchise Association (IFA) has already released a statement expressing their disapproval. 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. “It will have disastrous impacts to the thousands of franchise restaurants across the state and effectively dismantle the business model.”
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