An independent advocacy group representing McDonald’s franchise owners is speaking out against a newly passed fast food bill in California, claiming it will have a devastating financial impact on its members. The legislation, known as AB 1228, requires fast-food chains with at least 60 locations nationwide to pay their workers a minimum wage of $20 per hour starting April 1. While some labor groups had pushed for even higher wages, the $20 floor prevailed. However, despite support from franchise and restaurant advocacy groups, some owners are concerned about the implications of the bill in a challenging labor market and a period of high inflation for operators.
The National Owners Association (NOA), an advocacy group representing over 1,000 McDonald’s owners, predicts that the bill will cost each restaurant in the state $250,000 annually. According to the memo, the group believes that these costs cannot be absorbed by the current business model and warns that similar legislation may be introduced in other states. Furthermore, the NOA claims in the memo that a small coalition of franchisors, including McDonald’s, the National Restaurant Association (NRA), and the International Franchise Association (IFA), negotiated a deal with the Service Employees International Union (SEIU) without franchisee involvement, leading to the current legislative outcome.
On Monday, McDonald’s sent a letter to its restaurant system, acknowledging the passing of the bill and stating that it and other franchisee groups had fought against these policies. The company emphasized that it had formed a coalition of brands to refer an earlier version of the bill to California voters in 2024 and had increased its political engagement in the state. McDonald’s did not provide further comment on the NOA’s letter or position.
According to Roger Delph, a McDonald’s franchisee from California who served on the California owner/operator task force, collaborative efforts were made with McDonald’s, other franchisees, and separate companies to protect the business model from what he referred to as “an all-out attack.” He stated that conversations and meetings were held, including discussions with the Governor’s office directly. Delph disputed claims that franchisee involvement was absent or that the effort was not collaborative.
In its letter, McDonald’s highlighted changes made to the final version of the bill that were considered more favorable for owners than the initial proposed legislation. These changes eliminated the threat of joint franchisor-franchisee liability and prevented the reconstitution of the Industrial Welfare Commission, which would have had extensive powers over wage and workplace decisions for restaurants.
While the International Franchise Association (IFA) and the National Restaurant Association (NRA) expressed a positive outlook on the compromise, some critics argue that the costs will primarily fall on small business owners in the state. The NOA suggested ways for members, suppliers, and McDonald’s corporate office to support California owners, including reinvesting projected revenue from anticipated menu price hikes into California restaurants.
Worker advocates, who achieved wage hikes but not as significant as they initially sought, see this as the beginning of their fight. Mary Kay Henry, president of SEIU, stated that California’s Fast Food Council, which includes workers and franchisees, will have a seat at the table to improve industry standards and make fast-food jobs safer and more sustainable.
