If you run a fast food franchise, then you’ve probably been following the news about AB 257 and how it affects your business. This article explains what the bill is, what it means for you as a fast food franchise owner, and what you need to consider to protect your business. If you’re reading this article, it means that you are one of the many people who have asked us about AB 257 and its effect on fast food franchise owners. This article will give you a brief overview so that you can make an informed decision on how this bill will affect your business moving forward.
What is AB 257?
On January 31, 2022, the California State Assembly passed AB 257, the Fast Food Accountability
and Standards Recovery Act (FAST Recovery Act). It completely changes how and if many local restaurants can continue in business. This proposed bill would create a state-run council to negotiate wages, hours and working conditions for an industry that, according to federal data, employs more than 700,000 people in the state. This state-run council would consist of 11 unelected political appointees who will set wages, benefits and working conditions for all fast food restaurants with more than 30 locations nationwide. This is a major change, as most of these fast food, or counter-service restaurants, are individually owned and operated by community members. AB 257 threatens to upend the fast food franchise business model in California.
How Does AB 257 Affect Fast Food Franchise Owners?
1. It will increase your costs.
This means that you will need to adjust your operational plan to account for a higher cost of labor. As a a fast food franchise owner, you’re probably concerned about how this bill will affect your ability to hire and retain employees with a required higher minimum wage. AB 257 will likely impact both of these areas as it will increase your cost of labor by as much as 50%. If you’re currently paying your employees less than $15 per hour, then you’re not alone. In fact, about 60% of fast food workers, many of whom are younger and/or older workers, are currently making less than $15 per hour. AB 257 is projected to result in even more workers making less than $15 per hour as it will take time for employees to receive wage increases. This means that you’ll need to be even more selective about whom you hire. You’ll also need to think about investing more time and resources into recruiting and retaining employees, particularly as the wage increases are being phased in over the next few years.
2. You'll be legally responsible for your franchisees.
Aside from the increased costs, you will also be jointly responsible as a franchise owner with your franchisees. This is a significant change, as previously the model held franchisees independently liable from their franchise owners. If your franchisees are not compliant with the new wage, benefits and working-conditions standards, you will be legally responsible as a franchise owner, as will your franchisees.
In short, you will be forced to change and held accountable for these changes. Under the AB 257 bill, employers would be responsible for the regulations, but so would the fast food corporations that partner with franchise owners.
Why is AB 257 Important for Fast Food Businesses?
Overall, this bill is not favorable for those who own and operate fast food franchises. Franchisors and franchisees say AB 257 is unnecessary and burdensome and would raise prices for working-class customers. Profit margins will decrease, and it will make it difficult
to keep staffing restaurants.
“Inflation is top of mind for everybody,” said Jeff Hanscom, spokesman of the International Franchise Association, which represents corporations and franchisees. “It just doesn’t make sense.”
According to the California Restaurant Association, California has some of the nation’s strictest
worker protection laws, and pushback indicates these funds would be better o the state should instead fund its backlogged wage theft and workplace violation investigators.
How to Protect Your Business with Due Diligence and an Operational Plan.
There are a few different things that you can do to protect your business from the challenges that AB 257 will present. First, you’ll want to make sure that you’ve done your due diligence when it comes to researching employees and potential employees. You’ll want to be as thorough as possible to ensure that you are hiring the best possible people for your business. Secondly, you’ll want to take the time to create an operational plan that accounts for the increased cost of labor and that helps you to recruit and retain employees. You’ll want to think about how you can minimize the negative effects that AB 257 will have on your business and its employees so that you can continue to thrive. While this sounds overwhelming, Band of Hands will help you with this.
Band of Hands is partnered with the International Franchise Association to help franchise owners and franchisees succeed.
Band of Hands will help you hire and retain employees, and have access to an on-demand workforce, without the markups of a traditional staffing agency. Furthermore, Band of Hands will ensure your staff is compliant with today's current and future employment regulations. At a flat fee of $10/employee per week, our cost structure is affordable and predictable, allowing fast food franchise owners and operators to reallocate time and resources to running a successful business.
Band of Hands is a one-stop shop "HR in a Box" solution that handles everything from hiring, onboarding, payroll, payroll taxes, HR, compliance and more for one flat low fee.
Learn more at www.bandofhands.com/how-it-works
Ready to have the upper hand?