Sacramento’s latest target: small business owners

By Chantal Lovell
June 1, 2021

Assemblywoman Lorena Gonzalez nearly destroyed the entire independent contracting industry with her notorious legislation Assembly Bill 5. Now, she’s set her sights on small business owners and the hundreds of thousands of Californians they employ.

Assembly Bill 257 aims to demote over 25,000 franchise owners to middle managers and subject them to the authority of large corporations, an unelected board, and eventually, corrupt unions that put people like Gonzalez into office. The bill seeks to hit small business owners – particularly restaurant owners and workers – as they gasp for life after more than a year of Governor Gavin Newsom’s statewide shutdowns, restrictions, and mandates. 

The legislation, which could be called “AB5 2.0” for the devastating impact it would have on jobs, workers’ and businesses’ autonomy, takes advantage of the fact that most people don’t understand just how independent franchises truly are of their parent brand. Contrary to misconceptions, local franchise owners are responsible for hiring and firing decisions, setting wages and benefits, and ensuring their businesses comply with health, labor, and safety laws. The franchisor has very little say over the day-to-day operations of the small business.

If Gonzalez gets her way, franchise owners and the more than 373,000 people they employ would become employees of the national brand, and subject to its decisions, and the franchisor would be liable for actions by the franchises.

All parties would be subject to decisions made by a “Fast Food Sector Council” that would be created by the legislation. The board – which would be heavily dominated by union appointees – would have the authority to set industry wages and standards would supersede those set by the legislature. 

As with her attacks on independent contractors, Gonzalez and her supporters in Sacramento are going after the very people they claim they’re trying to help. Similar to the contracting industry, the number of female and minority franchise owners is rapidly growing, according to research by the International Franchise Association. Over the past five years, the amount of minority and female franchise ownership has increased by over 50 percent. While only 18 percent of non-franchise businesses are owned by minorities, nearly 33 percent of franchises are, demonstrating this model is a way to achieve the American Dream.

Sacramento politicians killed the American Dream for California’s freelancers. Let’s hope they don’t do the same to small business owners. 

Quote of the week

“The coronavirus pandemic opened many parents’ eyes to the new and different educational possibilities that are out there. While in the past many went with what their local district or even their local private school had to offer, the pandemic exposed millions of families to pandemic pods, microschools, hybrid homeschooling, virtual learning, and a host of different educational modalities that might better fit their child’s needs.” — Mike McShane, Forbes

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