CA Data Debunks Unions’ Claim Against Franchisees

Last year, voters submitted over a million signatures to delay the implementation of AB 257, the FAST Recovery Act, when data showed the state’s fast food industry was being unfairly targeted. The bill sought to install an unelected regulatory council to set workplace standards such as hours and wages for the entire industry with limited government oversight. A study by the Employment Policies Institute revealed fast food restaurants in California accounted for roughly 1% of all wage claims, far fewer than many other industries. Now, that law is on hold until voters get to decide on their ballots in 2024.

Now, the Service Employees International Union is looking to re-insert itself into the regulatory process – this time coming after franchisees. A new bill, A.B. 1228, seeks to place burdensome regulations on franchisee-owned fast food restaurants, arguing they are disproportionately responsible for wage violations.

The bill would create joint liability between an independent small business owner (franchisee) who owns a recognizable brand, and the company that establishes the brand’s trademark (franchisor). Joint liability creates other problems for business survival, including limiting flexibility of franchisees to make employment decisions that work best for their employees, and limiting small business ownership opportunities for would-be franchisees.

New EPI analysis pulls in California Department of Industrial Relations data from the full 2022 year to assess this claim. In an updated report on California’s fast food restaurant industry, EPI finds that franchisee-owned restaurants account for less than 1% of all alleged wage violations in the state. What’s more, this figure is significantly lower than the share of franchisee-owned fast food restaurant employees or establishments.

In 2022, wage claims from franchisee-owned fast food restaurants represented just two-thirds of one percent (0.65%) of all wage claims filed in the state. This is less than half the estimated share of California employment held by franchisee-owned fast food restaurants (1.7%). Just 102 franchise fast food establishments experienced a wage claim — representing less than one percent (0.77%) of the 13,366 franchisee-owned fast food locations in the state.


Read more about wage claims in franchisee-owned fast food restaurants in the Employment Policies Institute’s updated and expanded report, Not So FAST, here.