Pirate's Cove

This is a case of Progressives say “hey, this is a really good idea, let’s do it!” Rather like the good old saying here in the South “hey, y’all, watch this”

Why fast-food franchisees could be the next cohort to leave California

Alex Johnson is the kind of entrepreneur who built California. A second-generation small business owner in the San Francisco Bay Area, he and his family run 10 fast-food franchises employing 140 people, most of them first-time job holders like disadvantaged youth and new immigrants. Alex’s family has spent 30 years growing their small business. They’ve never had to close a store.

But the good times are likely ending. He just signed a deal to run nine stores in neighboring Nevada. These may soon be the only stores he runs, because California’s leaders have launched an all-out attack on his business model.

Alex is one of 14,000 franchise owners who’ve been targeted for extinction by California’s leaders. Last year, lawmakers passed the “FAST Act,” creating an unelected board of bureaucrats with unilateral authority to raise the minimum wage by nearly seven dollars per hour and set other labor rules. It only covers the fast-food industry, affecting both mom-and-pop small business owners like Alex and the national brands that such entrepreneurs license as franchisees. Yet the council’s mandates won’t apply to unionized businesses. Franchisees are essentially being extorted into unionizing.

Small business owners and more than 1 million California voters like Alex fought back. They secured a November 2024 referendum that could repeal the law, which is paused until then. In retribution, now unions have pushed lawmakers to target franchisees with even worse attacks.

The definition of fast food in the FAST Act is pretty expansive, and could hit a lot of restaurants besides McDonald’s, Burger King, Wendy’s, Subway, Carl’s Jr, etc, causing them quite a bit of trouble. And for them, why deal with it? Why wait and see what happens in the referendum? Especially since, even if the referendum passes the unions, Leftist wackjobs, and elected Democrats will attempt to try something else and do it fast. Why not just pack up and go elsewhere? Save the grief.

In February, Assemblymember Chris Holden, who authored the FAST Act, introduced a bill to mandate the so-called “joint employer standard.” Assembly Bill 1228–which passed the Assembly on May 31– would hold larger companies responsible for their franchisee’s operations, ostensibly to end labor violations like unpaid wages and poor working conditions. In the case of unpaid wages, this policy is a solution in search of a problem, since quick-service restaurants account for less than 2% of California wage claims–and franchisees less than 0.7%. It also makes no sense, since local franchise owners are responsible for pay and working conditions. Perversely, it would actually force larger companies to begin exerting control, taking away franchisees’ independence as small business owners.

Democrats aren’t even waiting for the results of the referendum, they’re going to make things worse before it happens.

Joint liability is the death knell of the franchise model. Since small businesses will be liable alongside the larger companies they franchise with, they’ll face significant litigation and administrative costs, hurting already slim profit margins. Worse still, the larger companies will take control of franchisees altogether and pursue a corporate ownership model in California, ending opportunities for new and longstanding small business owners.

So much for Democrats being for the little guy. Remember the days when fast food was a high school kid job. The minimum wage jobs were for kids,college students, retired folks and maybe for the non working spouse that wanted to work a little. Now it’s taken over by adults who expect to be paid enough to live on, including when they have kids. How many jobs will be killed by the time they have the referendum?