A new bill in California aimed squarely at the fast food industry has generated intense debate and pushback from major chains like McDonald’s.
California AB 1228, known as the Fast Food Franchise Act, would mandate a $20 minimum wage for fast food workers at chains with 60 or more locations in the state by 2024. This represents over a 30% increase from California’s current statewide minimum wage of $15 per hour. The bill would also make franchisors jointly responsible alongside franchisees for any labor law violations.
McDonald’s, the largest fast food chain in the world, has been outspoken in its criticism of AB 1228. The company claims the bill could “destroy the franchise model” in California through the unprecedented level of regulation and shared liability it proposes. McDonald’s argues the bill would create an undue financial burden for franchise owners who operate on thin profit margins already. The company also questions whether the bill would actually improve working conditions and pay as intended.
AB 1228 was introduced earlier this year in response to growing concerns over low pay, lack of benefits, unreasonable scheduling practices and other labor abuses in the fast food sector. Supporters of the bill, which include labor unions and worker advocacy groups, say it is necessary to ensure living wages and decent working conditions in an industry rife with problems. The $20 minimum wage represents what they believe is an appropriate pay floor to allow workers to afford California’s high cost of living.
However, opponents like McDonald’s and other fast food chains warn the regulations in AB 1228 could lead to unintended consequences like job losses, reduced worker benefits, higher consumer prices, and decreased competitiveness. Some major franchisors may also consider leaving the huge California market altogether rather than complying with what they see as overly burdensome new rules. This could significantly reduce job opportunities in the state.
The future of AB 1228 remains uncertain as it works through the lengthy legislative process in California’s state congress. But it represents a potential sea change in regulating the franchise business model that has come under increasing scrutiny.
If passed, the bill could set a new precedent for franchisor accountability and worker protections well beyond California. However, many urgent questions remain around how the new mandates would impact employment, costs, and availability of fast food in a state with over 40 million consumers.
All eyes are on how this controversial bill could reshape the fast food landscape in California and beyond. Its passage would mark an aggressive step toward reform, but concerns persist around unintended consequences for workers, businesses, and consumers.
