California lawmakers recently passed a bill that will have a significant impact on fast-food chains in the state, particularly McDonald’s. The bill, known as AB 1228, establishes a wage floor of $20 per hour for fast-food workers in California. While many workers stand to benefit from the increase in wages, some McDonald’s franchisees are concerned about the financial implications.
The National Owners Association (NOA), an independent advocacy group representing over 1,000 McDonald’s owners, projects that each restaurant in the state will incur an annual cost of $250,000 due to the bill. The NOA argues that such costs cannot be absorbed by the current business model and warns that similar legislation may follow in other states.
In a letter sent to its restaurant system, McDonald’s acknowledged the challenges posed by the bill and expressed its efforts to protect the interests of its franchisees. The company had formed a coalition of brands to refer an earlier version of the bill to California voters in November 2024. Additionally, McDonald’s increased its political engagement in the state by establishing a North America Impact Team and employing new lobbyists and campaign consultants.
While some franchise and restaurant groups have expressed concerns, others see the bill as a positive compromise. The International Franchise Association and the National Restaurant Association both believe that the bill protects the franchise business model in California while benefiting workers.
Critics of the legislation argue that the costs will primarily fall on small business owners in the state. The NOA suggests that McDonald’s corporate office should reinvest the projected revenue windfall resulting from anticipated menu price hikes into California restaurants. It also calls on suppliers and the company to support franchise owners financially.
Worker advocates, although pleased with the wage increases, believe that their work is far from over. They emphasize the importance of workers and franchisees having a seat at the table to help shape improved standards in the industry. They view the bill as a stepping stone towards making fast-food jobs safer and the industry more sustainable for everyone.
In conclusion, the passing of AB 1228 in California will introduce a wage floor of $20 per hour for fast-food workers. While this will provide a significant raise for many workers, McDonald’s franchisees have expressed concerns about the financial impact on their businesses. The debate surrounding the bill highlights the tension between worker rights and the financial viability of fast-food chains in an increasingly challenging labor market.