Fast-food franchisees large and small prepare to politically activate under new California law

THIS LAW. WORKER WRAPPING WHOPPERS ARE NOW MAKING $20 AN HOUR. WE EMPLOY ABOUT 6000 PEOPLE ACROSS THE STATE, ALL THE WAY UP FROM REDDING DOWN TO BAKERSFIELD. HARSH GUY IS CALIFORNIA’S LARGEST OPERATOR OF BURGER KING RESTAURANTS. HIS FRANCHISE GROUP OWNS 200 TOTAL FAST FOOD RESTAURANTS ON THE WEST COAST, INCLUDING SOME TACO BELL AND POPEYES LOCATIONS. MY DAD STARTED 25 YEARS AGO WITH ONE BURGER KING IN SAN JOSE, CALIFORNIA. I USED TO RUN IT HIMSELF, WORK THERE, OPEN TO CLOSE. I STARTED BUILDING RESTAURANTS, CREATING JOBS, AND THEN WHEN I CAME OUT OF HIGH SCHOOL, I STARTED WORKING WITH HIM AND WORKED MY WAY THROUGH HIS BUSINESS, THROUGH COLLEGE AS WELL. AND EVENTUALLY BECAME A FRANCHISEE MYSELF. GRAPPLING WITH CALIFORNIA’S NEW FAST FOOD LABOR LAW. GUY SAYS HIS BUSINESS IS DOING ITS BEST TO HAVE AN OPEN LINE OF COMMUNICATION WITH WORKERS. I’LL WALK YOU OVER HERE REAL QUICK. HE SHOWED US WHERE HE DISPLAYS IMPORTANT SIGNAGE OF HIS WORKERS RIGHTS. IT’S IN FRONT OF THEIR WORKSPACE SPACE, HE SAYS. WITH THE NEW LAW MENU, PRICES WILL LIKELY RISE AT HIS RESTAURANTS AND SOME CLOSURES ARE COMING. WE DID, HOWEVER, CLOSE EIGHT RESTAURANTS LAST YEAR BECAUSE OF PROFITABILITY ISSUES ACROSS THE STATE, AND WE ANTICIPATE CLOSING AT LEAST SIX MORE RESTAURANTS. THE CONSEQUENCES OF THE NEW LAW SOMETHING GUY TRIED TO AVOID, HE SAYS WORKERS IN HIS INDUSTRY WERE AN EASY TARGET FOR THE POWERFUL LABOR GROUP THAT PUSHED IT. THE SEIU. I THINK PART OF THE REASON IS THAT WE HAVE TENS OF THOUSANDS OF FAST FOOD RESTAURANTS ACROSS THE STATE, MOST OF THEM, ABOUT 80%, ACTUALLY ARE OWNED BY SINGLE UNIT OPERATORS. SO IT’S VERY DIFFICULT FOR PEOPLE WHO OWN ONE RESTAURANT OR TWO RESTAURANTS TO ACTUALLY BE ABLE TO HAVE A VOICE AND FIGHT SOME, SOME OF THESE THINGS. AND ULTIMATELY WE, WE, THEY CUT US OUT OF THE NEGOTIATIONS AND THE CONVERSATION. I LEARNED ON A SATURDAY MORNING THAT THIS WAS BEING SIGNED ON MONDAY MORNING. AND WHEN I WHEN I FOUND OUT ABOUT IT AND ASKED OUR BRANDS AND THE LOBBYISTS THAT HAVE BEEN WORKING ON THEIR BEHALF HOW THIS HAPPENED, WE WERE TOLD THAT IT HAPPENED WAS UNDER THAT THEY WERE ALL UNDER A NON-DISCLOSURE AGREEMENT AND THAT THEY WEREN’T ALLOWED TO TALK ABOUT IT. THERE WERE SOME PEOPLE IN THE ROOM THAT WERE REPRESENTING OUR BEST INTERESTS, APPARENTLY, BUT THERE WERE NO FRANCHISE FEES AND NO EMPLOYERS THAT WERE ACTUALLY INVOLVED IN THOSE CONVERSATIONS. SO WHEN YOU ASK, HOW IS THIS HAPPENING? THEY BASICALLY TOLD YOU, WE CAN’T REALLY SAY BECAUSE WE USE NON-DISCLOSURE AGREEMENTS. I WAS SPECIFICALLY TOLD THAT THAT THAT A NON-DISCLOSURE AGREEMENT WAS IN PLACE AND THAT THAT WE WEREN’T ALLOWED TO KNOW ABOUT IT. WHO IS IT UNDER YOUR UNDERSTANDING? WHO WAS IT THAT WANTED THE NDAS TO BE SIGNED? I HONESTLY AM NOT ENTIRELY SURE. I WAS TOLD AT ONE POINT THAT THE GOVERNOR’S OFFICE WAS REQUIRING NDAS. I’VE ALSO BEEN TOLD OTHER POINTS THAT THE SEIU. I WOULD SAY IT’S THE SEIU JUST BECAUSE OF THE FACT THAT SINCE THEN THEY’VE EMPLOYED IN MORE TACTICS. SO THEY’RE TRYING TO PASS FURTHER LEGISLATION IN THE CITIES. SAN JOSE, FOR EXAMPLE, AND WE ARE NOT ABLE TO SIT DOWN AND ACTUALLY TALK TO THE PEOPLE WHO ARE TRYING TO PASS THESE ORDINANCES. NOR ARE WE ABLE TO DISCUSS WITH THE CITY COUNCIL MEMBERS AS TO WHAT THEY WHAT THEY’RE BEING ASKED TO INTRODUCE. YOU DON’T WANT TO HAVE TO HIRE LOBBYISTS AND LAWYERS, BUT YOU HAVE, RIGHT? I MEAN, RECENTLY, RECENTLY BECAUSE OF THIS. I MEAN, IS THAT THE DIRECTION OPERATORS HAVE TO GO IN AT THIS POINT IS TO GET MORE ENGAGED WITH THE LEGISLATURE TO TO PUSH BACK AGAINST OTHER GROUPS, BASICALLY. ABSOLUTELY. I MEAN, IF I HAVE TO PAY LOBBYISTS TO DO THIS WORK ON MY BEHALF AND SPEAK ON OUR BEHALF, BECAUSE THOSE ARE THE PEOPLE THAT ARE BEING LED INTO THESE CONVERSATIONS, THAT’S LESS MONEY THAT COULD BE GOING TOWARDS PROGRAMS FOR MY EMPLOYEES. THAT’S LESS MONEY THAT I COULD BE PAYING MY MY EMPLOYEES. THAT’S LESS VACATION TIME THAT WE COULD BE GIVING OUR OUR TEAM MEMBERS AND OUR WORKERS. SO WE DON’T WANT TO HAVE TO DEAL WITH THAT. WE WANT TO WORK HAND IN HAND WITH OUR WORKERS. WE WANT TO HAVE SIT DOWNS WITH THEM DIRECTLY, AND WE WANT TO BE ABLE TO MAKE THEIR LIVES BETTER AND IMPROVE THEIR WORKING CONDITIONS BY SITTING WITH THEM. WHY DOES SEIU KEEP PUTTING WORKERS WHO HAVE BEEN WRONGED AT THE FOREFRONT OF THIS? I MEAN, HOW WOULD YOU RESPOND TO TO WHAT THEY CLAIM IS AN INDUSTRY THAT MIGHT HAVE THIS PERVASIVE NESS OF MISTREATING ITS WORKERS? YEAH. LOOK, I THINK THAT UNFORTUNATE ISSUES HAPPEN IN EVERY INDUSTRY AND THEY SHOULD ABSOLUTELY BE ADDRESSED HEAD ON. AND WE SHOULD BE WE SHOULD BE ABLE TO SIT DOWN WITH THOSE EMPLOYEES AND THOSE WORKERS AND FIGURE OUT THE SOLUTIONS TO THOSE PROBLEMS OURSELVES. HOW DO YOU DESCRIBE YOUR RELATIONSHIP WITH YOUR EMPLOYEES? OUR EMPLOYEES ARE THE BACKBONE OF OUR BUSINESS, AND WE’RE GOING TO DO EVERYTHING IN OUR POWER TO IMPROVE OUR RELATIONSHIPS WITH THEM. OVER THE LAST SEVERAL YEARS, WE’VE IMPLEMENTED A LOT OF DIFFERENT THINGS IN OUR ORGANIZATION. FOR EXAMPLE, I HAVE A COUPLE OF PEOPLE IN MY OFFICE THAT CONSTANTLY MONITOR BREAKS TIME CLOCK ADJUSTMENTS, AND THEIR JOB IS TO JUST MAKE SURE THAT PEOPLE ARE TAKING THEIR BREAKS THAT THEY’RE ENTITLED TO. WE HAVE SAFETY PROGRAMS IN PLACE NOW, SO IF SOMEBODY GETS A CUT, SOMEBODY FALLS. WE HAVE PROGRAMS TO ENSURE THAT THEY’RE TAKEN CARE OF AND THAT THEY’RE TAKEN TO THE RIGHT CLINICS AND THEY GET THE MEDICAL ATTENTION AND THE CARE THAT THEY NEED. BUT AT THE SAME TIME, IT’S GOING TO BE IMPORTANT FOR US AS OPERATORS TO MEET WITH OUR EMPLOYEES MORE OFTEN, FOR THEM TO GET TO KNOW WHO WE ARE AND FOR US TO ENSURE THAT THEY’RE GETTING THEY HAVE AN OPEN WE HAVE AN OPEN DOOR POLICY. THEY SHOULD BE ABLE TO COME AND TELL US WHATEVER THEY NEED, YOU KNOW, AND TO MAKE THEIR LIVES BETTER. NOW, GUYS TOLD US THE USE OF ARTIFICIAL INTELLIGENCE AND AUTOMATION ARE CONVERSATIONS THAT ARE ABSOLUTELY HAPPENING WITHIN HIS RESTAURANT GROUP. WE ARE STILL WAITING TO HEAR BACK FROM THE SEIU ON WHAT EXACTLY IT’S TRYING TO ACCOMPLISH AT THE LOCAL LEVEL. THAT COULD FURTHER IMPACT THOSE RESTAURANTS. THANKS. AND THERE ARE STILL MANY UNANSWERED QUESTIONS FOR SMALL BUSINESS OWNERS, SPECIFICALLY THOSE WHO SELL SNACKS SUCH AS PRETZEL STANDS, BOBA TEA, CINNAMON BUNS AND ICE CREAM. LAST WEEK, WE FIRST BROUGHT YOU THE STORY OF A HANDLES ICE CREAM FRANCHISEE. SHE SAYS ONLY THREE OF HER EMPLOYEES ARE FULL TIME WORKERS. THE REST ARE HIGH SCHOOL AND COLLEGE AGE STUDENTS WORKING JUST A FEW HOURS AT A TIME. SHE TOLD US. THE SEIU LABOR GROUP AND THE LAWMAKER WHO WROTE THE BILL TOLD HER IT WAS NOT THEIR INTENT TO INCLUDE BUSINESSES LIKE HERS. SO THAT’S CREATED SOME CONFUSION. SHE HAD A MEETING WITH THE GOVERNOR’S OFFICE TODAY, AND WE CAUGHT UP WITH HER RIGHT AFTER THAT. THE MAIN TAKE IN SPEAKING WITH THE LEGISLATIVE SECRETARY WAS WHERE ARE NOT IN WE’RE NOT. OUT. AND THE DECIDING FACTOR SEEMS TO BE THE FAST FOOD COUNCIL. THEY UH, SHE DID MENTION THAT THE GOVERNOR’S OFFICE APPOINTED THE FAST FOOD COUNCIL, AND IT’S UP TO THEM TO MAKE THE DECISION ALONG WITH THE DEPARTMENT OF INDUSTRIAL RELATIONS. WHERE DO YOU GO FROM HERE? THAT’S THE MILLION DOLLAR QUESTION, PROBABLY LITERALLY THAT WE ALL WANT TO KNOW TODAY IS APRIL 1ST. THE IMPLEMENTATION OF THE BILL IS TODAY. WHETHER OR NOT THE WE STAY AT 16 OR GO TO THE 20 AND IT’S STILL AS AMBIGUOUS AS IT WAS WHEN I STARTED THIS FIVE MONTHS AGO. NOW THE FAST FOOD COUNCIL DOES NOT HAVE ITS NEXT MEETING SCHEDULED. GOVERNOR NEWSOM’S OFFICE HAS TOLD US THE COURTS COULD ALSO END UP DET

Some owners of fast-food chains across California are investing in new, political resources following the passage of the state's fast-food labor law. The law on Monday triggered a minimum wage increase for all fast-food workers to $20 an hour. Moving forward, a new state council will bargain the annual pay raises and working conditions for the state's nearly half a million fast-food workers until at least 2029. "We don't want to work with lobbyists; we want to run our restaurants," Harsh Ghai told KCRA 3, California's largest operator of Burger King restaurants. His company, Ghai Management, owns 200 fast-food restaurants along the West Coast, with most of them in California. In addition to Burger King, the group operates some Taco Bell and Popeyes locations. But Ghai and other local restaurant owners have said working with lobbyists and politically activating is a step they must take following the last-minute negotiations of the law that went into effect this year. They noted the cost of California's new minimum wage and other impacts fall onto the local franchisee, and not their major corporations. The 25% wage increase adds to their other costs including those associated with branding, rent and other taxes and fees. Ghai said he'll likely have to raise prices and close about six restaurants this year. California's new law was first proposed in 2021, but its final negotiations at the very end of the 2023 legislative session were done behind closed doors. Sources have told KCRA 3 that the International Franchise Association was part of those discussions to finalize the law, but those discussions were protected under a non-disclosure agreement. | TIMELINE | Everything we know about California's new fast food minimum wage lawThe fast-food industry was mostly represented by the major corporations that were trying to avoid a proposed law that could have held them liable for the workplace violations of their franchisees, including McDonald's and YUM! Brands, the corporation that oversees KFC, Taco Bell, Pizza Hut and The Habit Burger. "There were some people in the room that were representing our best interests, apparently. But there were no franchisees, and no employers that were actually involved in those conversations. I was told specifically that a non-disclosure agreement was in place, and I wasn't allowed to know about it," Ghai said of the closed-door negotiations. The powerful Service Employees International Union required the fast-food industry representatives to sign the NDA to build trust during the contentious talks. It's the group's power and influence that has prompted franchisees like Ghai to pay more attention to politics. Campaign finance data show the SEIU has spent millions swaying California's Democratic-led government. The labor group has spent about $5 million on Gov. Gavin Newsom and his recent political causes. That includes $3.6 million in contributions to his 2021 campaign to fight his recall election and another $1 million to help his latest campaign to help pass his mental health bond measure known as Proposition 1. The SEIU has also contributed $74,150 to California's Assembly Speaker Robert Rivas since 2012, and since 2012, $90,000 to State Senator Toni Atkins, who was the leader of California's Senate at the time the labor law passed in 2023. These dollar figures only represent just some of the war chest of money the group has spent to keep or install other leaders in office at the state and local levels. "They've been getting more aggressive in the cities," Ghai told KCRA 3, who said SEIU is trying to push local ordinances to place more regulations on fast-food restaurants in some cities including San Jose and Los Angeles. "We are not able to sit down and actually talk to the people who are trying to pass these ordinances, nor are we able to discuss with city council members as to what they're being asked to introduce by the SEIU." Ghai said the possible proposed ordinances, which have yet to be made public, include mandatory training for workers on their rights as employees, and a requirement for restaurants to have security guards. The SEIU did not respond to a request for comment on its new policy pushes at the local level. "They want to make it much more stringent on us and make it much more difficult for us, and much more costly for us in order to be able to operate," Ghai said. "If I have to pay lobbyists to do this work on my behalf and speak on our behalf because those are the people that are being led into these conversations, that's less money that could be going towards programs for my employees; that's less money that I could be paying my employees." Gabriela Campbell, a smaller operator of one Handel's Ice Cream parlor has so far spent thousands on lobbyists and attorneys in an effort to get clarity on the new law. She has been questioning whether her business and other snack vendors like it fall under the new law. She said even after meeting with Newsom's office on Monday when the new wage went into effect, she still didn't have a definitive answer. "The main take from the legislative secretary was, 'we're not in, we're not out.' And the deciding factor seems to be the fast-food council," Campbell said on Monday. "I really hope Governor Newsom's office can talk to the fast-food council to let them know we truly aren't that business that's employing full-time breadwinners." Campbell noted the meeting included other Handel's franchisees and their lobbyists. When asked how the group will proceed, she said "That's the million-dollar question — literally." She said in the meeting she reiterated that most of her employees are college or high-school students, with three full-time employees. She said two are over 21; the other is 19 years old. Campbell has said both the SEIU and the office of the lawmaker who wrote the law, Assemblyman Chris Holden, expressed it was not their intention to put businesses like hers into the law. | MORE LIKE THIS | California lawmaker introduces bill to prohibit NDAs in legislative negotiations "Our attorney spoke with SEIU a few months ago, and at the time we were told to seek a new bill to exclude us," Campbell said. She said the ice cream parlor franchisees are not trying to be excluded, but for the law to clarify that it's not meant to include them. Crafting legislation requires the help of lobbyists. She said her group has now tried to contact every state lawmaker for help. The fast-food council doesn't have its next meeting scheduled. See more coverage of top California stories here | Download our app.

SACRAMENTO, Calif. —

Some owners of fast-food chains across California are investing in new, political resources following the passage of the state's fast-food labor law.

The law on Monday triggered a minimum wage increase for all fast-food workers to $20 an hour. Moving forward, a new state council will bargain the annual pay raises and working conditions for the state's nearly half a million fast-food workers until at least 2029.

"We don't want to work with lobbyists; we want to run our restaurants," Harsh Ghai told KCRA 3, California's largest operator of Burger King restaurants.

His company, Ghai Management, owns 200 fast-food restaurants along the West Coast, with most of them in California. In addition to Burger King, the group operates some Taco Bell and Popeyes locations.

But Ghai and other local restaurant owners have said working with lobbyists and politically activating is a step they must take following the last-minute negotiations of the law that went into effect this year. They noted the cost of California's new minimum wage and other impacts fall onto the local franchisee, and not their major corporations. The 25% wage increase adds to their other costs including those associated with branding, rent and other taxes and fees. Ghai said he'll likely have to raise prices and close about six restaurants this year.

California's new law was first proposed in 2021, but its final negotiations at the very end of the 2023 legislative session were done behind closed doors. Sources have told KCRA 3 that the International Franchise Association was part of those discussions to finalize the law, but those discussions were protected under a non-disclosure agreement.

| TIMELINE | Everything we know about California's new fast food minimum wage law

The fast-food industry was mostly represented by the major corporations that were trying to avoid a proposed law that could have held them liable for the workplace violations of their franchisees, including McDonald's and YUM! Brands, the corporation that oversees KFC, Taco Bell, Pizza Hut and The Habit Burger.

"There were some people in the room that were representing our best interests, apparently. But there were no franchisees, and no employers that were actually involved in those conversations. I was told specifically that a non-disclosure agreement was in place, and I wasn't allowed to know about it," Ghai said of the closed-door negotiations.

The powerful Service Employees International Union required the fast-food industry representatives to sign the NDA to build trust during the contentious talks. It's the group's power and influence that has prompted franchisees like Ghai to pay more attention to politics.

Campaign finance data show the SEIU has spent millions swaying California's Democratic-led government. The labor group has spent about $5 million on Gov. Gavin Newsom and his recent political causes. That includes $3.6 million in contributions to his 2021 campaign to fight his recall election and another $1 million to help his latest campaign to help pass his mental health bond measure known as Proposition 1.

The SEIU has also contributed $74,150 to California's Assembly Speaker Robert Rivas since 2012, and since 2012, $90,000 to State Senator Toni Atkins, who was the leader of California's Senate at the time the labor law passed in 2023. These dollar figures only represent just some of the war chest of money the group has spent to keep or install other leaders in office at the state and local levels.

"They've been getting more aggressive in the cities," Ghai told KCRA 3, who said SEIU is trying to push local ordinances to place more regulations on fast-food restaurants in some cities including San Jose and Los Angeles. "We are not able to sit down and actually talk to the people who are trying to pass these ordinances, nor are we able to discuss with city council members as to what they're being asked to introduce by the SEIU."

Ghai said the possible proposed ordinances, which have yet to be made public, include mandatory training for workers on their rights as employees, and a requirement for restaurants to have security guards.

The SEIU did not respond to a request for comment on its new policy pushes at the local level.

"They want to make it much more stringent on us and make it much more difficult for us, and much more costly for us in order to be able to operate," Ghai said. "If I have to pay lobbyists to do this work on my behalf and speak on our behalf because those are the people that are being led into these conversations, that's less money that could be going towards programs for my employees; that's less money that I could be paying my employees."

Gabriela Campbell, a smaller operator of one Handel's Ice Cream parlor has so far spent thousands on lobbyists and attorneys in an effort to get clarity on the new law. She has been questioning whether her business and other snack vendors like it fall under the new law.

She said even after meeting with Newsom's office on Monday when the new wage went into effect, she still didn't have a definitive answer.

"The main take from the legislative secretary was, 'we're not in, we're not out.' And the deciding factor seems to be the fast-food council," Campbell said on Monday. "I really hope Governor Newsom's office can talk to the fast-food council to let them know we truly aren't that business that's employing full-time breadwinners."

Campbell noted the meeting included other Handel's franchisees and their lobbyists. When asked how the group will proceed, she said "That's the million-dollar question — literally."

She said in the meeting she reiterated that most of her employees are college or high-school students, with three full-time employees. She said two are over 21; the other is 19 years old.

Campbell has said both the SEIU and the office of the lawmaker who wrote the law, Assemblyman Chris Holden, expressed it was not their intention to put businesses like hers into the law.

| MORE LIKE THIS | California lawmaker introduces bill to prohibit NDAs in legislative negotiations

"Our attorney spoke with SEIU a few months ago, and at the time we were told to seek a new bill to exclude us," Campbell said. She said the ice cream parlor franchisees are not trying to be excluded, but for the law to clarify that it's not meant to include them.

Crafting legislation requires the help of lobbyists. She said her group has now tried to contact every state lawmaker for help.

The fast-food council doesn't have its next meeting scheduled.

See more coverage of top California stories here | Download our app.

Fast-food franchisees large and small prepare to politically activate under new California law

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