Franchising contributes nearly half a trillion dollars to the United States’ gross domestic product each year, noted McDonald’s CEO Chris Kempczinski. “Now imagine for a moment if that went away,” he said. “If franchised businesses were to go away, so to would opportunities for wealth generation for tens of thousands of underrepresented entrepreneurs. Millions of jobs would go away and billions in GDP would evaporate.”
Speaking today during the International Franchise Association’s annual convention in Las Vegas, Kempczinski used much of his time on stage to talk about California’s FAST Act and proposed legislation in other states that would impose new regulations on the restaurant and franchise industries. “The reality is, that our business model is under attack. For most of the past decade, the National Labor Relations Board, at the behest of organized labor, has been trying to make major changes to labor market regulations, which would come at the expense of your businesses and my business.”
Kempczinski is the first McDonald’s CEO to speak at the IFA’s annual event and his appearance comes as the company has increased its public pushback against regulations at the state and federal level that target fast food, franchising or both.
Joe Erlinger, president of McDonald’s USA, has written and spoken out numerous times to warn of the potential impact of the FAST Act, which would establish a fast-food industry regulatory council with the authority to set standards for workers, ranging from wages to health and safety conditions. Signed into law in September, the FAST Act is now on hold until a referendum vote in 2024.
McDonald’s, the world’s largest restaurant chain with more than 40,000 units and $112.5 billion in global sales, has also opposed a decade-long effort by the NLRB to toughen the joint employer standard. That effort has been revived under the Biden administration as regulators push to make franchisors liable for the employment practices of their franchisees.
“It would destroy the very independence and spirit of entrepreneurship that provides opportunity for so many,” said Kempczinski. He noted joint employer legislation has been introduced in California and New York, and that individual state activity has pushed the company to broaden its efforts beyond the federal level.
“We weren’t as good at the state level as we probably needed to be. We’ve had to mobilize ourselves in the last couple years and get our act together at the state level because that’s where the battle is happening now,” he said.
Kempczinski called out what he said is a change in strategy on the part of labor organizers who, instead of coming into individual restaurants to get workers to sign union cards, are working with state legislators. “If you can get the right coalition of leaders at the state level to pass legislation, you can essentially get unionization to happen by fiat,” he said.
While McDonald’s “absolutely supports” legislation that “leads to meaningful improvements in our communities—and that includes responsible increases to the minimum wage,” Kempczinski said any legislation should apply to all industries and all workers.
“Together, we must candidly evaluate our workplaces and implement our own reforms while pushing ourselves to advocate for reasonable legislation that helps and does not hinder the communities that we serve,” he said.
