International Franchise Association Urges ‘No’ Vote on AB 257

Cites significant prices increases for 7 in 10 Californians; Bill to be voted on in California Senate Appropriations Committee today, final step before full Senate

WASHINGTON, DC – The International Franchise Association (IFA) today released the following statement ahead of a vote in the Standing Committee on Appropriations of the California State Senate on Assembly Bill 257, or the “FAST Recovery Act.”

“IFA strongly urges a ‘no vote’ on AB 257 and for members to take into consideration the significant price increase that 7 in 10 Californians would face,” said IFA President and CEO Matthew Haller. “This bill forces an unnecessary tax on working families across the state during a time of historic inflation. It would unequivocally hurt locally owned and operated restaurants and have sweeping impacts on a huge portion of the restaurant industry. This hits so much more than fast food – it hurts families and communities dependent upon vital food service.

“AB 257 is a solution to a problem that doesn’t exist, with the State of California’s own data showing that quick-service restaurants account for less than 1.6 percent of wage claims. In addition, the bureaucracy created by this bill, known as the Fast Food Sector Council, is entirely unaccountable to the people of California, with expansive and unchecked authority,” Haller continued.

There are about 34,700 food franchises in California, 69.4% of which are owned by single-unit franchisees. Based on data from Oxford Economics, franchisees of color and female owners are represented at a disproportionately high rate in the franchising sector – around 26% of franchises are owned by people of color, compared with 17% of independent businesses generally.

Franchises also generally offer better pay and benefits to their employees. On average, franchises pay 2.2 – 3.4% higher wages than similar nonfranchises. In terms of benefits, more than 65% of franchise workers are offered health insurance, a greater proportion than among small establishments in general, and approximately 76% of franchise workers are offered vacation, holiday, and sick leave.

“The proponents of the bill are saying they’re trying to address violations of labor law like wage theft and meal and rest break violations, those are violations of existing law,” said Greg Flynn, a franchisee of 24 Panera Bread restaurants in Northern California. “What’s needed is enforcement of those laws. Our margins, our profits have gone down from 9% to 3.5%. We’re barely hanging on. And when I think about the creation of a state council that is designed specifically to add more costs, I don’t know if we can make it.”

If the bill passes the Senate Appropriations Committee, it heads to the full California Senate for a vote.

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