McDonald’s Franchisees Slam Draconian CA Fast Food Bill, 'Will Result in a Devastating Financial Blow'

(AP Photo/Gene J. Puskar, File)

The California legislature has been outdoing itself lately with nutty parent-hating and business-killing legislation. Among other measures, they recently passed AB 957, the "Gender-Affirming' bill," which would force you to validate the gender identity of your child or face punishment. 


On Thursday, they were at it again, as the state Senate passed fast-food bill AB 1228, which will impose new requirements and costs on businesses that are already struggling in the post-pandemic, inflationary world.

The National Owners Association, which advocates for McDonald’s franchisees, is not happy:

"The new ‘AB 1228’ legislation has been voted into law and will result in a devastating financial blow to California McDonald’s franchisees at a projected annual cost of $250,000 per McDonald’s restaurant," the advocacy group representing some 1,000 McDonald’s franchisees said in the memo obtained by FOX Business. 

 "These costs simply cannot be absorbed by the current business model."

Here are some of the new rules franchisees will face if Governor Gavin Newsom signs the bill into law (which he has already pledged to do):

  1. It would raise the minimum wage for fast-food workers to $20 per hour.
  2. It would apply to restaurants with at least 60 locations nationwide, except for restaurants that make and sell their own bread.
  3. It would also create a 10-person council to govern fast-food chains and set guidelines for working conditions and wages. 

Why are restaurants that make their own bread exempt? I'm guessing some well-financed lobbying group got that language inserted.


Perhaps the most controversial aspect of the bill is that the council will have the ability to keep raising the minimum wage:

At issue is a provision in the compromise that establishes a council that will set wages for fast-food chain restaurants, including a $20 minimum wage for those restaurants starting next April, a 29% increase over the current minimum of $15.50. That, plus potential 3.5% increases over the next five years, could bring the minimum wage for fast-food chain restaurants to $25 an hour by 2029.

The pro-union movement "Fight for $15" is thrilled:

Many often look at California and its crazy legislature and simply laugh. What they fail to realize is that what starts there often ends up in other states:

The NOA suggested AB 1228’s passage could lead to similar efforts by legislative bodies elsewhere in the country, adding, "We need to remain unified so that this can not gain a foothold anywhere else."

How will franchises deal with the increased cost? They'll probably have to raise prices or fire some workers:


Faced with a mandate to pay higher wages, fast-food operators will have to decide how they plan to deal with elevated labor costs. Some may raise menu prices, although customers may balk at having to foot the bill. Others may try to make do with fewer workers on hand or to invest in automation to handle more tasks.

Leading up to the passage of the measure, there was an extensive, heated back and forth among the restaurant industry, the governor's office, unions, and the legislature, and both sides won some key compromises in the final bill. Nevertheless, it's likely that it will be the consumers who once again end up facing even higher prices.


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