My MBA Career: How Californias Fast Food Bill is Impacting Small Business Owners

Last Updated on September 20, 2023 by Robert C. Hoopes

Title: McDonald’s Franchise Owners Criticize “Draconian” Fast Food Bill in California

In a bold move, the National Owners Association (NOA), representing over 1,000 McDonald’s franchise owners, has come out strongly against a recently passed legislation in California, calling it “draconian”. The bill, known as AB 1228 or the Fast Food Franchisor Responsibility Act, aims to introduce new standards for wages, working hours, and other conditions for fast food workers.

AB 1228 specifically targets fast food chains with at least 60 locations nationwide, with the exception of those that make and sell their own bread. The most significant change that the bill introduces is a minimum wage hike to $20, which is expected to take effect on April 1, 2024. Additionally, it proposes the creation of a 10-person council responsible for overseeing fast food chains and establishing guidelines for wages and working conditions.

However, the NOA argues that the bill would impose costs that cannot be absorbed by the current business model, particularly impacting small business owners who operate 95% of McDonald’s restaurants in California. According to the NOA’s estimation, the annual cost of complying with the legislation would amount to a staggering $250,000 per McDonald’s restaurant.

One of the major concerns raised by the NOA is that AB 1228 would hold McDonald’s restaurant owners legally responsible for local employment decisions. Critics fear that this may lead to an increase in frivolous lawsuits against franchisees, ultimately resulting in higher operating costs.

Governor Gavin Newsom of California holds the fate of the bill in his hands, as he has until October 14 to either sign it into law or veto it. While his past comments suggest he may be inclined to support it, the final decision remains uncertain.

Beyond the immediate implications for McDonald’s franchise owners in California, the NOA expresses broader concerns that the bill’s passage through the Senate could set a precedent and encourage similar efforts by legislative bodies in other states. This, in turn, could potentially undermine the ability of franchisees to make essential local business decisions.

As the deadline for Governor Newsom’s decision approaches, McDonald’s franchise owners anxiously await the fate of AB 1228. It remains to be seen how this contentious bill will reshape the fast-food industry in California, and whether it will serve as a catalyst for similar legislation in other states.