Labor and small businesses team up on California franchising law

On Thursday, the California State Assembly is expected to consider a law that could dramatically alter the shape of fast food and other franchised industries in the state.

Senate Bill 610 (SB 610), which has already been approved by the State Senate, would make it harder for franchisor companies such as the McDonald’s Corporation to end licensing agreements with franchisees. The proposed law has polarized the business community, and become a flashpoint in organized labor’s efforts to transform the franchising business model.

The question before the Assembly is whether current state law is sufficient to protect franchisees from the arbitrary whims of major franchisers. If made law, SB 610 would prevent a franchisor from severing licensing agreements with their franchisees unless they can demonstrate that a “substantial and material breach … of a lawful requirement” of the agreement has taken place. The bill also says licensing agreements cannot obstruct the right of franchisees to participate in franchisee associations, or prevent them from selling their franchises, although the franchisor must still give consent for a sale to take place.

Read the Full Article

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Operations

Hitting resistance elsewhere, ghost kitchens and virtual concepts find a happy home in family dining

Reality Check: Old-guard chains are finding the alternative operations to be persistently effective side hustles.

Financing

The Tijuana Flats bankruptcy highlights the dangers of menu miscues

The Bottom Line: The fast-casual chain’s problems following new menu debuts in 2021 and 2022 show that adding new items isn’t always the right idea.

Financing

For Papa Johns, the CEO departure came at the wrong time

The Bottom Line: The pizza chain worked to convince franchisees to buy into a massive marketing shift. And then the brand’s CEO left.

Trending

More from our partners