McDonald's Independent Franchisee Association Strongly Opposes California AB 1228

Topic:

Proposed Bill Would Give National Fast-Food Corporations Significantly More Control Over Local Restaurants

SACRAMENTO, CA / ACCESSWIRE / July 7, 2023 / The National Owners Association (NOA), on behalf of more than 1,000 franchisee owners operating more than 6,000 McDonald's small restaurant businesses and employing over 300,000 individuals in the U.S., strongly opposes California Assembly Bill 1228. This proposed bill would destroy the franchise model in California - a proven pathway to business ownership and generational opportunity for entrepreneurs.

California is home to more than 15,000 franchised restaurants. The overwhelming majority of these restaurants are locally owned and operated by small business owners. Approximately 70% of franchisees only own one restaurant and many have invested their lives and life savings into their small business. Further, 95% of the 1,300 McDonald's restaurants are locally owned and operated by small business owners and more than two-thirds of owner/operators are women or people of color.

The special interest groups behind AB 1228 claim that binding franchisees to their franchisor with joint liability would benefit the small business owners operating restaurant franchises in California. Forcing national franchised corporations to assume legal liability and control over franchisees in no way helps franchisees. In reality, it will force greater corporate control, shattering the successful franchise model in California that has provided a path for thousands of hardworking entrepreneurs to create hundreds of thousands of jobs.

Currently, franchise owners maintain control over operating their restaurants, including hiring, employee wages, scheduling, benefits, and workplace standards. AB 1228 would force national fast-food corporations to exert significantly more control over local franchised restaurants by making them legally liable for local employment decisions. As a result, AB 1228 could turn locally run small businesses essentially into corporate-run restaurants.

This bill would result in additional frivolous lawsuits against franchisees. These lawsuits would lead to higher food costs for consumers and unsustainably higher operating costs that would result in the shutdown of locally owned restaurants and the loss of local jobs. If national fast-food corporations are facing added litigation, they will have no choice but to exert more control over our local franchise operations. AB 1228 would effectively demote franchisees to middle managers working for the corporation instead of the independent business owners they are today. In the long term, they could face non-renewal of their licenses.

For the reasons outlined above, the NOA joins thousands of California franchisees in strongly opposing this legislation.

About the National Owners Association: The National Owners Association is an independent, self-funded advocacy group of McDonald's franchise owner-operators with members across the country.