The Fast Food Franchisor Responsibility Act, or AB 1228, is a proposed law currently under review in California’s legislature. This law, which initially seems to favor franchisees, requires franchisors to comply with employment laws and share liability for any breaches with their franchisees. However, the Act’s implications are more complex upon closer inspection.
The Act’s origins lie in the amendments to the Fast Food Accountability and Standards Recovery Act (FAST Recovery Act) (AB 257), enacted by Governor Newsom in September 2022. The FAST Recovery Act aimed to establish a Council to set minimum standards for wages and working conditions. However, its implementation was halted by a court injunction, and it will now be put to a vote on the 2024 ballot.
The Fast Food Franchisor Responsibility Act primarily aims to impose shared civil legal responsibility and liability for franchisee violations on fast food franchisors. This means that an employee or former employee could file a lawsuit against not only the franchisee but also the franchisor for violations of various employment laws.
The bill also stipulates that any agreement by the franchisee to indemnify the franchisor for liability would be against public policy and therefore void and unenforceable.
AB 1228 was approved by the California Assembly on May 31, 2023, and is currently under review by the state Senate. If passed, the Act would likely compel franchisors to take a more active role in the day-to-day management of fast food restaurants, thereby reducing the decision-making authority of franchises.
However, the ultimate decision on this matter will now be in the hands of the people, as the FAST Recovery Act will be put to a vote as a proposition on the 2024 ballot. This means that the future of the fast food franchise model in California will be determined by the voters.