Opposition to fast-food bill gains momentum

AB 1228 passed the Assembly Floor last month and is scheduled to be heard in the California Senate Judiciary Committee on Tuesday, July 11.

When Marisol Sanchez bought her first McDonald’s franchise in 2006, she wanted a business she could own, operate and eventually pass along to her children.

Seventeen years later, the 43-year-old Apple Valley resident is the owner of 17 McDonald’s locations in Los Angeles and San Bernardino counties.

She’s also among the more than 162 businesses, franchise owners, trade associations and chambers of commerce that oppose a bill they say would turn locally owned and operated restaurants into corporate-run establishments, stripping franchisees of their authority to operate as small business owners.

Assembly Bill 1228, authored by Assemblyman Chris Holden, D-Pasadena, is designed to “make it easier for franchisees to pay, support and protect their employees.” Also known as the Fast Food Franchisor Responsibility Act, it would require fast-food corporations to share in the legal responsibility and liability for a franchise owner’s violations.

That means a worker or former employee would be able to sue both the franchisee and franchisor for a host of workplace violations, ranging from wage theft and sexual harassment to workplace injuries and non-compliance with CalOSHA regulations.

The bill would also give franchise owners the ability to file an action against their franchisor for monetary relief if the company’s terms infringe on their ability to comply with California labor laws.

“Many franchisees find themselves in a chokehold by franchisor terms, forcing them to choose between profitability and complying with employee protection regulations,” Holden said in a statement.

The bill says the current franchise model under which fast-food restaurants operate “contributes to the high rate of employment violations.”

The legislation passed the Assembly floor in June and is scheduled to be heard in the California Senate Judiciary Committee on Tuesday, July 11.

Opponents say AB 1228 would prompt fast-food corporations to “tighten the reins” on franchise owners, impacting their ability to make their own business decisions.

“The corporate brands will get more involved,” said Kathy Fairbanks, a spokeswoman for the No on AB 1228 coalition.

Fairbanks said franchise owners who bought equipment, hired employees, instituted training and set wages, benefits and hours would effectively be reduced to middle management.

Opponents say the bill would also invite frivolous lawsuits, as franchise owners could be sued under California’s Private Attorneys General Act for claims that have already been settled by the franchisor.

The text of AB 1228 was originally part of AB 257 (FAST Recovery Act), which was co-authored by Holden. That legislation was signed into law Sept. 5, 2022, by Gov. Gavin Newsom but was subsequently postponed until the November 2024 election when voters will decide its outcome.

The bill would create a state-run council to negotiate wages, hours and working conditions for fast-food workers in California, and establish a minimum wage with capped annual increases thereafter at restaurants with more than 100 locations nationwide.

The No on AB 1228 movement continues to gain momentum.

More than 150 franchise owners gathered in Sacramento in May to speak out against AB 1228 during a Legislative Action Day — far more than the 80 franchisees who showed up in Sacramento last year to protest AB 257, Fairbanks said.

“We also have nearly 1,000 individual franchisees who have signed up to oppose AB 1228, versus about 200 who opposed AB 257,” she said.

Workers in the fast-food industry have loudly called for increased workplace protections.

Last month, cooks and cashiers at a McDonald’s in East Los Angeles held a lunchtime protest, claiming management has pressured them to work while sick or recovering from serious injuries.

And in July 2022, fast-food workers caravaned across Orange County to demand passage of AB 257, which they say would protect them from sexual harassment, wage theft, safety violations and workplace violence.

California is home to more than 15,000 franchised quick-service restaurants and the No on AB 1228 coalition said AB 1228 would lead to higher costs, resulting in the shutdown of locally owned restaurants.

An Oxford Economics survey of more than 4,000 independent franchise owners found that roughly 26% of franchises are owned by people of color, and nearly a third of respondents said they would not be able to own a business without the opportunity of franchising.

Sanchez, whose Mcdonald’s workers earn a starting wage of $17 an hour, said AB 1228 could eventually end the franchise model in California

“More attorneys would get into the business of suing us,” she said. “This bill doesn’t provide any new protections, and it doesn’t talk about labor laws. It just opens the doors to new shakedown lawsuits.”