McDonald's Franchisees in California Fear Financial Blow from New Fast-Food Law

The National Owners Association (NOA), representing McDonald's franchisees, has criticized California's recently-passed AB 1228 as "draconian" and costly. The legislation raises the minimum wage for fast-food workers to $20 per hour and establishes a council to govern fast-food chains. The NOA claims that the projected annual cost of $250,000 per McDonald's restaurant cannot be absorbed by the current business model. They have called on McDonald's to direct potential price increases towards operational improvements and research and development. The NOA also alleges that a small coalition of franchisors negotiated a deal with the Service Employees International Union without franchisee involvement. The passage of AB 1228 could potentially lead to similar efforts in other states. McDonald's has stated that it worked to protect owner/operators' ability to make decisions for their businesses and is piloting innovative solutions in response to the legislation.