Subscribe to Entrepreneur for $5

What You Need to Know About the FAST Act Legislation

A pressing issue is heating up in the franchising industry.

Opinions expressed by Entrepreneur contributors are their own.

What is AB 257?

Assembly Bill (AB) 257 stands for The Fast Food and Accountability and Standards Recovery Act, or simply the "FAST Act." The bill is advancing in the California State Assembly and, if passed, would give the state's fast-food workers (and unions) added influence over their workplace standards and wage rates. The bill would also consider franchisees and franchisors to be joint employers, sharing equal accountability of any violation of labor standards.

Related: Labor Shortage? Depends on Who You Ask.

Committee-based Governance

If AB 257 becomes law in California, it will call for the establishment of an 11-person committee with the authority to draft and potentially enact new state labor standards for the QSR industry. The panel would consist of two union/labor advocacy representatives, two fast-food workers, individuals representing the franchisor and franchisee interests and five additional members representing various state-level agencies.

Related: California Votes to Strip Employee Protections From Uber and Lyft Drivers

Positions Staked on Both Sides

AB 257 is undoubtedly pro-union in its aims, having drawn praise from the Service Employees International Union (SEIU), whose president described its passage as a potential "gamechanger for reducing income inequality" in how fast-food workers are treated in California.

The International Franchise Association (IFA), on the other hand, has the opposite opinion. It states that the bill is "one of the most damaging pieces of legislation to ever impact the franchise business model." The franchising industry's most prolific trade group believes that AB 257's joint employer definition exposes franchisors to increased liability in operating their businesses according to their proven models.

What Happens Next?

While this issue is playing out in California, the passage of AB 257 could have far-reaching implications for how franchise owners conduct business in other states if a new precedent is established. The bill was up for a vote last July, but was defeated by a mere three votes. Now, it's another attempt at passage, having cleared through the California State Assembly back in January of this year. California's Senate will be the next battleground, as the bill is due for consideration this spring.

Related: Solving the Labor Shortage for Small Businesse

Entrepreneur Editors' Picks