California’s bill AB 257 (also known as the FAST Recovery Act) was signed into law last fall and was supposed to go into effect just a few days ago on January 1, 2023. You may recall that California’s Fast Recovery Act would have created a supervisory panel which has the unilateral power to control nearly all aspects of the franchisee employer- franchisee employee relationship and to increase pay for all franchisee employees. No other state has ever created a supervisory panel with such unchecked unilateral power to control franchisees and their employees.

However, one group of small and large restaurants called Save the Local Restaurants is fighting back in the courts by filing a lawsuit and submitting a referendum petition. As a result, on December 30, 2022, a mere two days before the law would go into effect, a Sacramento County Superior Court judge issued an order that temporarily blocks California from implementing the new law.

What is a referendum? A referendum is basically the process by which the people get to vote on whether or not they approve or reject statutes or parts of statutes. In order to get the referendum process started, you must first submit a petition signed by at least 5% of the number of people who voted in the most recent election for governor. Once the signatures are collected and authenticated, the referendum will qualify for the ballot, where the public will get to vote on it during the next November election cycle.

As part of the referendum process, Save the Local Restaurants was required to submit a petition signed by at least 5% of the number of people who voted in the most recent election for governor, which today translates to roughly over 600,000 people. In its lawsuit, Save the Local Restaurants submitted more than 1 million signatures as part of their referendum petition challenging AB 257. The state is currently still authenticating the signatures needed to pass the referendum. As a result, the court has issued a temporary restraining order that prevents California from implementing AB 257 pending the authentication of the required petition signatures.

If the state authenticates the number of signatures required, implementation of AB 257 will be suspended until at least November of 2024, when it will be put to a public vote as part of the 2024 election cycle.