What You Need to Know About California’s AB-257 Bill

In FranNet of California’s quest to keep our readers informed of the latest issues and trends affecting the franchising industry, we present an interesting topic for consideration. When many people hear the term “franchising,” it instantly conjures up images of fast food restaurants. While it’s true that many quick-service restaurants (QSRs) are part of the franchising marketplace, they actually make up less than 25% of the nearly 4,000 different concepts available. Nonetheless, these franchise opportunities remain popular with entrepreneurs and franchisee candidates who investigate various business models in search of the perfect fit for their income and lifestyle goals.

If you’re among them, there’s some interesting legislative action underway in the state of California that could impact the way the restaurant industry operates – especially for business owners. Lawmakers in the Golden State are debating the merits of Assembly Bill (AB) 257, entitled the “FAST Recovery Act.” Even if you don’t reside in California, this legislation could eventually set a precedent for lawmakers in other states. Here’s what you need to know about how the bill may change certain labor standards in the restaurant industry.

AB 257 by Definition

At its heart, this is legislation that clearly favors labor rights and standards for an estimated 700,000 California restaurant and hospitality employees. AB 257, the FAST Recovery Act, is up for debate this month. If the bill eventually becomes law, the provisions outlined in the Act would change the way that local proprietors – and their parent companies – operate in their day-to-day operations. Specifically, there would be new workplace standards that would give them the power to coalesce and hold their local owners and parent corporations accountable. This new standard of labor liability would apply to franchisors, as well as franchisee owners.

Favorable Terms for Labor

If passed, the FAST Recovery Act would allow employees to assign liability – and even sue – their owners for things such as wage violations and unpaid overtime. It would also provide for the creation of a state-level, fast food sector “council” that would have a say in wage and labor standards. Instead of just a franchisee owner being held liable, the burden also extend to the brand’s corporate office.

What’s at Stake for Proponents and Opponents

As one would expect, California’s restaurant association and chamber of commerce oppose the new bill, citing a threat to the very business model of franchising, as well as unnecessarily driving up costs. Labor advocates, on the opposite side of the issue, claim it will empower employees to hold their bosses liable for wage theft and create more accountability in the restaurant and hospitality industry.

So far, California Gov. Gavin Newsome has not publicly stated his support or opposition to AB 257, though the state’s finance department is opposed to the legislation – on grounds that it would create additional costs and delay labor enforcement actions.

Let’s Chat!

If you’d like to review your options and consider adding franchise ownership to your portfolio of assets, we’d love to introduce you to this strategy. Meetings with FranNet of California are always no-cost and no-obligation to you. Our role and function is to be your guide, allowing you to make your own informed decisions on the direction you want to go. Over time, we’ve had the opportunity to work with hundreds of entrepreneurs who ended up owning the business of their dreams – and we can do the same for you. Getting started with FranNet of California is easy, and you can book an introductory session with us by following this link.

Aug 29, 2022