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California Fast Food Franchise Owners Say Proposed Law Would Kill Their Businesses

McKenzie Jackson | California Black Media

Nathan Carter wore numerous hats while working at McDonald’s restaurants. Eventually, he became the owner of several locations of the fast-food business in Los Angeles.

      As a teenager, the Pasadena native prepared food, mopped floors, operated the register, repaired ice cream machines, and cleaned the playpens at McDonald’s locations owned by his father, Norman, a McDonald’s franchisee of 32 years.

      The younger Carter enjoyed manning the drive-thru window.

      “I loved having a complete shift without any errors in the drive-thru,” he recalled. “I learned and embraced it all.”

      Carter worked in finance after graduating from college, but eventually returned to the golden arches business. It wasn’t McDonald’s mouth-watering sweet tea or tasty French fries that caused him to leave his cubicle though, says Carter. Instead, he missed interacting with people.

      “I loved the fast pace, the comradery, and the getting to know — not just the people you are working with — but customers as well,” he stated. “I wanted to work alongside my father.”

      In 2020, Carter became the owner of a McDonald’s location in Southeast Los Angeles. Currently, he owns three restaurants, while his father owns four. Together, the Carters employ at least 650 people at their McDonald’s restaurants, all located in Los Angeles County.

Carter, the son, is in the locations he owns daily.

      “The environment is great,” he said. “We have great relationships and great pride in our employees. If they have any issues, they can come talk to me or my father.”

      However, Carter and other owners of Golden State fast food locations like Arby’s, Chick-fil-A, Jack in the Box, and Subway have expressed concern that their hard work and the benefits of running their own profitable businesses could be impacted if Assembly Bill 1228 is passed by the California Legislature  and Gov. Gavin Newsom signs it into law.

      The bill, also known as the Fast Food Franchisor Responsibility Act, was authored by Assemblymember Chris Holden (D-Pasadena). If passed, AB 1228 would require major fast-food businesses and franchisees to share all legal responsibility and liability for the franchisee’s workplace health and safety violations of California Labor Law.

      “The bill would authorize enforcement of those provisions against a franchisor, including administratively or by civil action, to the same extent that they may be enforced against the franchisee,” AB 1228’s text reads. “The bill would require that a franchisor has the opportunity to cure a violation after written notice, as prescribed, before civil action may be commenced. The bill would provide that a waiver of the bill’s provisions, or any agreement by a franchisee to indemnify its franchisor for liability, is contrary to public policy and is void and unenforceable.”

      Currently, franchisees have control over operating decisions such as benefits, employee wages, hiring, scheduling, and workplace standards at their restaurants. Holden’s act would force national fast-food corporations to take control over these decisions at franchised locations, according to Stop the Attack on Local Restaurants, a coalition of 115 social justice advocates, restaurant owners, small business owners, and restaurant brands opposed to AB 1228.

Carter, a coalition member, called the bill an attack on franchisees’ rights.

      “It takes away the ability to run our business,” he said. “This bill is a detriment to our relationship with our employees, the things we do in our community. If a bill like this passes, we won’t be able to do some of the things we love and are passionate about.”

      Rick Callender, the President of the California Hawaii NAACP Conference, has noted that more than 30% of franchised businesses are run by people of color. AB 1228, Callender explained, would rob many Black franchisees, like the Carters, of their livelihoods.

      “Legislators should reject this very bad bill,” he stated. “The NAACP won’t allow one of the strongholds for Black business ownership to be attacked in this fashion. AB 1228 will essentially take away Black people and other people of color’s right to operate their local restaurants independently and erasing much of the progress they’ve made to build economic equity and generational opportunity for their families and communities.”

      When AB 1228 passed the Assembly Labor and Employment Committee on April 12, Holden, a former franchise owner, said the legislation makes it simpler for franchisees to pay, support, and protect their employees.

      “We have the ability to do more for fast food employees by focusing on the relationship between franchisors and their franchisees,” he noted. “I believe many franchisees want to do right by the people that work for them but may not see it as possible under their franchisor’s terms and conditions. This can help to provide some relief while protecting employees and businesses.”

      The Service Employees International Union (SEIU), an AB 1228 supporter, currently said parent fast food businesses are protected from having to pay damages for violations of employment law.

      Holden introduced AB 1228 in February around the same time another bill he penned, AB 257, was successfully opposed by Stop the Attack on Local Restaurants and its supporters.

      The provisions in AB 1228 were originally stripped out of AB 257 before Gov. Gavin Newsom signed it into law last September.

      That bill was set to establish sector-wide minimum standards on wages, working hours, and other working conditions. Opponents said the law would increase food costs and cause job losses in the fast-food industry. They gathered enough signatures to overturn the law and have a referendum on it placed to voters on the November 2024 ballot.

      AB 1228 is scheduled to be reviewed during the Assembly’s Committee on Appropriations May 18 hearing. Holden is the committee’s chair.

      Fast food corporations supply franchisees with food and equipment. Carter said that should be the extent of their relationship.

      “The bill is something we all feel is not necessary,” he said. “We do things for our employees; we do things for our communities; and ultimately, we feel this bill is not needed.”

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