It's Time for California Lawmakers to Stand Up for Local Restaurants

Franchise Economy

This week, the California State Assembly is attempting to revive the so-called “FAST Recovery Act” or AB 257 after it failed in the legislature last year. This legislation would effectively end the existing franchise model in California, an industry that supports nearly 25,000 quick service restaurants in the state, employing over 373,000 Californians. This bill would hurt the entrepreneurs who have built these local businesses, the hundreds of thousands of jobs they support, and the communities in which they operate.

AB 257, supposedly intended to provider safer working standards – a goal we strive to achieve, would instead create an unelected Council to set workplace policy, unaccountable to the legislature and outside of existing labor regulation. This “Council” will develop and enforce workplace policy, creating new layers of bureaucracy with unprecedented authority by union officials, free of meaningful oversight and with the ability to overrule state regulation. It also attempts to change the existing definition of employer, making the dedicated entrepreneurs who own franchises mere employees of their brands and restricting new entrepreneurs who want to go into business under a brand name that is already known to the public. In addition, it would remove most franchise owners’ interactions with their workers, a detriment to employees and owners alike.

After nearly two years of devastation from the pandemic, California restaurants need more support than ever. After the rise of the Omicron variant, 89 percent of California restaurants experienced a decline in customer demand for indoor on-premises dining. In addition, 77 percent of restaurant operators say their restaurant is less profitable now than it was before the pandemic and that business conditions are worse now than three months ago.

The franchise model provides opportunities to countless entrepreneurs in California, promoting business ownership to more minorities, immigrants, and women, and creating jobs with higher wages, hours, and benefits than their non-franchised counterparts. In fact, people of color own 60% of California restaurants, and franchised businesses nationwide pay 2% to 3% higher wages.

Last year, IFA partnered with the California Restaurant Association and others to defeat the legislation narrowly. This go around the bill’s authors have introduced amendments that claim they address the concerns of the previous version, but they are simply an effort to garner more votes while all the original issues still exist. To address some of the common misconceptions about the bill, go here.

California lawmakers have the choice to do what is best for local businesses and employees in their time of need. The franchise model and counter service restaurants play a critical role in promoting entrepreneurship, restoring the economy, and serving every community in the state. We urge the State Assembly to stop this attack on local restaurants and stand with the job creators and the workers in their state.