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In brief

California Assembly Bill 1228 or, the “Fast Food Franchisor Responsibility Act” (“Bill”) seeks to make fast food franchisors liable for certain civil violations committed by their franchisees. The Bill was passed by the California Assembly on May 31 and awaits a vote in the Senate. If signed into law in its current form, the Bill would drastically increase the legal exposure of certain franchisors in the fast-food industry. 


  1. Background
  2. In depth
  3. Key takeaways


In September 2022, the California State Legislature passed A.B. 257, the Fast Food Accountability and Standards Recovery Act (“FAST Act”). The FAST Act provides for the creation of the country’s first state-run “Fast Food Council” staffed by a mixture of government employees, workers, union representatives, and employers that would establish industry standards for wages, hours, and working conditions. The initial draft of the FAST Act also created joint liability for fast food franchisors for the actions of their franchisees, but that provision was excluded in the final bill passed by the Senate. Prior to the FAST Act taking effect, vocal opponents of the law filed a petition for a referendum to be placed on the general election ballot in 2024, which has resulted in enforcement of the FAST Act being delayed until the referendum is decided. Regardless of whether the FAST Act becomes enforceable, however, the Bill would revive its excluded joint employer liability provisions.

In depth

On February 16, Chris Holden—the California Assembly member representing Pasadena—introduced the Bill, which would add a new section to the California Labor Code. The stated aim of the Bill is to force franchisors to “take greater responsibility for achieving compliance with employer laws throughout their franchise networks” by “appropriately allocat[ing] the costs and risks of liability for employment violations”, “incentiviz[ing] franchisors to do their part to ensure and enable compliance with employment laws, and ensur[ing] that harmed individuals can receive a full recovery”.

The Bill provides for shared civil liability for fast food franchisors with more than one hundred locations when a franchisee violates any of the following: the Fair Housing and Employment Act, California’s Unfair Competition Law (UCL), wage and hour provisions of the California Labor Code, California Labor Code provisions relating to immigration status, California Labor Code provisions relating to contracts against public policy, CalOSHA regulations, the Private Attorneys General Act (PAGA), and other state, county, or municipal orders regarding employment standards, worker health and safety, and public health and safety.

Before imposing joint liability, the Bill gives franchisors a 30-day (or 60-day, if requested to complete an investigation) window to “cure” alleged violations of the covered laws. To “cure,” the franchisor must abate the alleged violations, ensure that its franchisee is in compliance with the relevant laws, and “ma[k]e whole” “any fast food restaurant workers against whom a violation was committed”. The Bill does not define how a worker would be determined to be made “whole”.

Additionally, the Bill provides safeguards to avoid circumvention. Specifically, the Bill prohibits agreements which seek to waive the joint liability it creates, as well as agreements to indemnify franchisors and franchise agreements which “create a substantial barrier” to franchisees complying with the employment law provisions listed above. The Bill lists as a potential “substantial barrier” franchise agreements that provide insufficient funds for a franchisee to comply with these laws. The Bill does not provide guidance as to what “insufficient funds” might mean in this context, but provides for a rebuttable presumption that any changes to franchise agreements which increase the costs of the franchise would create a substantial barrier to compliance. Franchisees can sue franchisors for monetary or injunctive relief necessary to remove such barriers and ensure that the franchisee can comply with the law.

Key takeaways

  • The Bill creates joint employer civil liability for certain fast food restaurant franchisors for employment-related violations of law by franchisees.
  • Franchisors have an opportunity to avoid joint liability by curing the violation within 30 days (or 60 days, if an investigation is warranted).
  • Franchisors must rebut a presumption that any increase in costs to franchisees is an attempt to impose “substantial barriers” to compliance with employment laws by franchisees.
  • Franchisees who allege that a “substantial barrier” to compliance with the prescribed laws has been imposed by a franchisor may bring suit against the franchisor for monetary and/or injunctive relief to ensure compliance.

Will K. Woods represents franchisors throughout their business life cycle: in the start-up stage; as middle-market franchisors; and as mature, global franchisors. He represents many of the leading hotel, lodging and hospitality franchise companies and has vast experience in negotiating complex franchise and licensing transactions both in the US and in many other countries around the world and in counseling clients across industries with respect to system restructuring and related relationship issues and brand expansion. Will has been listed in Chambers USA and Chambers Global as a leading franchise lawyer every year since 2010 and was praised by clients as a "thorough, diligent and hardworking lawyer: someone who always tries to find a solution." Chambers also noted that he "impresses with his sophisticated international transactions practice" and that he is "client-service oriented, giving practical, useful and implementable advice." He is included in An International Who's Who of Franchise Lawyers and as a Legal Eagle and one of the top 101 franchise lawyers in the US and Canada by Franchise Times. He is regularly named one of the Best Lawyers in Dallas by D Magazine. He was also designated by The Best Lawyers in America as a "Best Lawyer of the Year – Franchise Law" on several occasions. Will is a Certified Franchise Executive. He is the Immediate Past Chair of the ABA Forum on Franchising and serves on the Forum's Governing Committee in that capacity.


Abhishek Dubé ("Abhi") assists clients with franchise and distribution transactions, including international and M&A transactions. He counsels clients in a wide range of industries, including food and beverage, hotel and lodging, retail, fitness, automotive, and alcohol. Abhi has worked with new and existing franchise programs, and structured and negotiated franchise and distribution transactions for the world’s leading brands. Abhi is a Certified Franchise Executive. He serves as a Board Member of the ABA Forum on Franchising's International Division, as well as the International Franchise Association Foundation's Diversity Institute.


Nancy is a partner in our Firm's North America Litigation and Government Enforcement Group and is based in our Los Angeles office.


Michael is an Associate in our Firm's North America Litigation and Government Enforcement Group and is based in our Los Angeles Office. Michael is a commercial litigator and has developed a broad practice representing both plaintiffs and defendants in federal and state litigation.

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