Los Angeles Business Journal

Take State Franchise Act Off Menu

OP-ED By Andy Wiederhorn Monday, July 22, 2013

When most people think of Fatburger, they think of custom, grilled-to-order M, L, XXL and XXXL burgers – but what you may not realize is that franchised businesses, such as Fatburger, are also economic powerhouses. According to a recent study by Moody’s Analytics, franchised businesses are responsible for 8 million jobs in the United States, with business services, restaurants and food retailers leading the way.

As the chief executive of Fatburger, I’m not surprised by these findings. We have 150 restaurants in 27 countries with 300 more restaurants in development. That is a whole lot of opportunity waiting to be realized from the franchisee small-business owners to new employees and local restaurant suppliers.

Franchise problems

But there is a potential problem on the horizon for not just Fatburger but all franchise businesses. Right now, the state Legislature is considering SB 610. Basically, this bill would rewrite California’s Franchise Relations Act – a law that works for both parent companies and franchise owners. SB 610 would undermine current law and could derail economic growth from franchised businesses in California. Here’s how:

SB 610 would make it possible for franchise owners to cut corners when it comes to brand standards – despite signing a contract agreeing to uphold those very standards.

For example, one Fatburger owner might offer the full menu and high-quality food our loyal customers have come to expect, but another Fatburger owner might not. They might take healthier options like veggie burgers and turkey burgers off the menu. An owner could decide that making hand-scooped real ice-cream shakes just isn’t worth the effort and start using soft serve instead. They might even try and save a buck by using cheaper frozen beef patties, precooking burgers and storing them under a heat lamp until you, the customer, walk in the door.

In other words, while you might recognize the logo on the door, the restaurant inside would be anything but a real Fatburger, and under SB 610, there is nothing I can do to help the situation.

At Fatburger, we have spent the last 60 years building our brand and reputation. We are nothing without it. We continue to do everything we can to ensure that we consistently deliver the highest-quality burgers, fries, onion rings and hand-scooped ice-cream shakes to you, our customer – that includes opposing SB 610.

Fatburger was founded in Los Angeles in 1952. We are a part of this state and proud of our California heritage. Each new restaurant we open creates jobs and contributes to the local economy and community. Opening any new location is a risk, but SB 610 makes it even riskier. As a result, Fatburger and other franchise businesses like it may decide not to invest as much in California, meaning fewer new jobs in our state. SB 610 hurts both business owners and the consumer. Under SB 610, we all lose.

Andy Wiederhorn is the chief executive of Fatburger, which has more than 40 Southern California locations.