A reprieve for the franchise business model in California | Lewitt hackman


California Assembly Bill 257, the Fast Food Restaurant Responsibility and Restoration Act (Quick Payback Act or AB 257) was defeated by the California Assembly on June 3, 2021. The bill was introduced by Assembly member Lorena Gonzalez, and if passed, would have been a disaster for franchisors restaurants, franchisees and their employees in California.

AB 257 only needed three more votes to become law. Assembly member Gonzalez tabled a motion that the Quick Payback Act reconsidered so that the bill can be returned to the legislature in January 2022.

The bill would have created a Fast Food Restaurant Council (Council) which would have had 11 members appointed by the Governor, the Speaker of the Assembly and the Rules Committee of the Senate, each for a four-year term.

The Council would have had the power to set standards for minimum wages, maximum hours and other working conditions for fast food restaurant employees, fast food franchisees and fast food franchisors with 30 or more restaurants. in the USA

Franchisors would have been required to review these standards at least once every three years and to issue, modify or repeal employment, health or safety standards for fast food restaurants as the Council deemed appropriate. In addition, fast food franchisors should have ensured that their franchisees comply with certain laws on employment and public health and safety of workers and would be jointly and severally liable for any penalties or fines imposed due to violations of those laws. laws by their franchisees.

Fast-food franchisees would have been allowed to take legal action against their franchisors to challenge the terms of their franchise agreements and their compliance with certain laws and would have been jointly and severally liable if the terms of a franchise agreement had passed. proved to be an important factor in engaging the liability of franchisees. The waivers and indemnification agreements given by the fast food franchisees in favor of their franchisors would have been contrary to public order, void and unenforceable.

The bill was supported by the Service Employees International Union (SEIU). The International Franchise Association (IFA), which protects and promotes franchising by educating lawmakers and the public about the franchise business model, has strongly opposed AB 257 and has worked with the California Restaurant Association and others. to oppose it.


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