California Fast Food Workers Get A Win With Passage of SB 610
A year and a half after it was first introduced into the state legislature, the California Senate finally passed SB 610. In broad strokes, the bill entails fast food franchise owners to more rights than they previously had, making it more difficult for the corporations they're franchising from to terminate their contracts.While this is good news for the owners, it's great news for their workers.
To understand the new law, it's worth first detailing exactly how a fast food franchise works.
A large portion of the bigger fast food corporations -- McDonald's, Wendy's, Taco Bell, Papa John's, and so on; In-N-Out refuses to franchise because they don't want to lose control of their operations -- offer opportunities for outside franchisees to take their existing product and design, and use it to make their own store. To do so, however, the franchisees must pay a large sum of money in start-up costs (building construction, equipment, and a "franchising fee") and also pay a percentage of their monthly sales to the corporation.
For corporations, it's a no-risk way to get money without having the headache of running the store. (McDonald's franchises earn roughly $32 billion a year, four percent of which goes to the corporation.) For owners, it's a shortcut to profits by utilizing preexisting brand awareness. (The other 96 percent of the above-mentioned $32 billion goes to the owners.)
However, there are a few catches to the concept.
Most importantly, franchises are not autonomous entities free to do whatever they want. Each franchise has to abide by a very stringent set of rules, or else risk losing their contract and, along with it, the money they've invested. While this makes sense from the side of the corporation -- they have to guard against a franchisee hurting their brand by, say, suddenly serving an entirely different menu -- owners' hands are tied when it comes to other aspects of the business as well.
For instance, a lot of corporations don't allow the franchises to join forces with other franchises or transfer ownership to another person. They also have to follow very specific requirements handed down from the corporation regarding the wages and benefits they offer their employees.
Not anymore, thanks for SB 610. Because of its passage, franchise owners in California can provide an actual living wage for their employees:
The SEIU argues that the bill's passage will pave the way for increased wages and benefits for employees, as franchisees no longer have to worry about the threat of contract termination for introducing such benefits.
That SEIU is the Service Employees International Union, the second biggest union in the country, and the folks helping bring about a fast food employees union. Whether or not this new law actually leads to higher wages remains to be seen. But now franchise owners will be able to offer them without fearing retribution from the corporation.
Not everyone is happy, of course. The corporations feel this vote will pave the way for franchises to do whatever they want, meaning that customers won't know what products or service quality they'll be getting when they walk into any [fill in the blank]. This is not exactly an argument that makes sense: The franchises still have to follow health codes, and franchise owners have a much greater financial incentive to keep their customers happy. In reality, corporations don't like this law because they're scared of what it may mean to their own bottom lines.
It's not hard to imagine the dominos falling from this decision. First, a few franchises offer higher wages and benefits. Workers there become better motivated, offering better service than nearby corporate-owned stores. Corporate workers begin griping more often while the franchise stores draw more customers. And ultimately, the corporation is forced to offer the same benefits or suffer the consequences.
This may -- may -- be the first step towards higher wages for all.
