SB 610

Please read Editorial from NY Times on SB610 which Small Business California has been working so hard on. Thank you Debbie Nosowsky for sending to me.


When he vetoed a bill this week that would have strengthened the legal rights of franchisees in dealings with their corporate owners, Gov. Jerry Brown of California condoned an economic status quo that squeezes small businesses and low-wage workers even as corporate profits rise.

Of course, he did not put it that way. In a statement explaining his veto, the governor echoed the bill’s mainly Republican opponents, saying there was inadequate evidence of unacceptable or predatory practices by corporate franchisers to warrant a new law.

That assertion, however, ignores ample evidence of just such practices. Even before the California Legislature took up the issue, developments in contract and antitrust law over nearly 20 years had given corporations ever more control over franchisees. In the last two years, California lawmakers in multiple committees heard extensive testimony from both sides of the issue, which was openly debated in the Legislature in addition to being the subject of press coverage and heavy lobbying.

The picture that emerged is one in which many if not most corporate franchise agreements extract heavy fees, royalties and other payments, while leaving franchisees with little if any say over business operations and, by extension, how much they can afford to pay their workers. At a hearing last June, a McDonald’s franchisee who supported the bill told legislators that corporate overseers had told her that she was paying employees “too much,” and that she could make more money — for herself and the corporation — by paying them less.

The California bill — by giving franchisees a bigger say in the operation, closure, sale and transfer of their businesses — would have been an improvement. It also would have propelled change elsewhere, because California is so big and influential. Still, change will come, if for no other reason than that the current hardships inflicted on small businesses and hourly workers are untenable. The questions are when change will come and from where.


Scott Hauge
President
Small Business California
2311 Taraval Street
San Francisco, CA  94116
shauge@cal-insure.com
415-680-2188