In the Wall Street Journal today, IFA President and CEO Matt Haller details impacts of legislation on consumer and small businesses; New research shows bill would cause double-digit increase in food prices

WASHINGTON, DC – A new survey released today shows less than one-third of California voters support Assembly Bill 257, or the “FAST Recovery Act.” The survey, from RG Strategies, shows support for AB 257 is down a full 10 points since March 2022, as AB 257 will increase costs for consumers and harm local businesses. 

“All signs are telling legislators to reject this bill,” said International Franchise Association President and CEO Matt Haller. “AB 257 is a solution in search of a problem that doesn’t exist. Voters don’t want it, consumers don’t want higher prices, and franchisees don’t want corporations being forced to take over their businesses.”

In the Wall Street Journal today, Haller writes, “Quick-service restaurants have been essential providers of affordable food during a period of crippling inflation, often providing better value than grocery stores. Operating on single-digit profit margins, they can’t absorb cost increases without passing them to consumers. The sting will be felt by the nearly 70% of Californians who visit a counter-service restaurant each week.”

A few key findings from the survey include:

  • Less than one-third (32%) of California voters support AB 257, while 47% oppose the proposed law.
  • Seventy-five percent of voters agree that if the Food Sector Council in AB 257 causes prices in counter service restaurants to increase, they will frequent these restaurants less often.
  • Sixty-one percent of voters agree that establishing a Food Sector Council to oversee aspects of the counter service industry will cause restaurants to raise their prices.

As inflation, housing affordability, and the rising cost of groceries and gas dominate concerns of likely voters, support for AB 257 is plummeting. Ninety percent of voters say that rising costs on essential items are very or somewhat concerning.

If passed, AB 257 would impose a food tax that will lead to higher prices at thousands of local food establishments in California. Over the last year, grocery prices spiked 12% and restaurant prices increased nearly 8%.

Nearly seven in 10 Californians frequent counter service restaurants that will be negatively impacted by AB 257 at least once a week, including 79% of Latino voters and 80% of voters who make less than $25,000 per year.

“Our customers come to us because we’re affordable,” explained Sanna Shere, a Burger King franchisee based out of southern California. “Californians are already suffering under the weight of inflation and the FAST Act will make it harder to live, work, and own a business in the state. Franchising affords women and minorities a higher rate of business ownership, yet this bill will effectively dismantle the franchisee business model in California.”

AB 257 would transfer legislative powers to a council of political appointees to set standards for a subsection of California’s restaurant industry, while forcing corporate ownership of all counter service restaurants. The joint and several liability portion of the bill makes the franchisor liable for things that it does not control, disincentivizing further expansion through franchising.

“California already has one of the most challenging climates for business, and this bill will make it next to impossible for quick-service operators who operate on razor-thin margins,” said Greg Flynn, who owns a number of quick-service restaurants in California. “The costs associated with the FAST Act will raise prices without improving standards.”

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About The International Franchise Association:

Celebrating over 60 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the approximately 775,000 franchise establishments that support nearly 8.2 million direct jobs, $787.7 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.

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