McDonald’s Owners Say California’s New Minimum Wage Is ‘Devastating:’ Report

A group representing roughly 1,000 McDonald's franchisees said California's new minimum wage law will deal a "devastating financial blow" to their businesses, according to a memo seen by CNBC.

The bill, coined the ‘Fast Food Franchisor Responsibility Act,' passed by the California senate on Thursday, establishes a $20 hourly minimum wage for fast food workers at chains with 60 or more national locations.

The National Owners Association, which represents the franchise owners, said the financial commitment required by the bill “simply cannot be absorbed by the business model,” CNBC said. 

The changes created by the bill would cost each McDonald’s franchise in the state $250,000 a year, NOA added, according to CNBC. 

The bill will bump the wages of the fast food workers up from the state’s current $15.50 an hour minimum. 

The association, which didn't immediately return a request for comment, said restaurants may need to raise menu prices.

Not all groups representing franchisees took issue with the bill. Matt Haller, the president and CEO of the International Franchise Association, said “this agreement creates the best possible outcome for workers, local restaurant owners and brands, while protecting the franchise business model in California.” 

McDonald's declined to comment directly on the bill, providing a statement instead from one of its state franchisees.

"Anyone who is suggesting this was not a collaborative and successful effort to protect the franchised business model in California, or that franchisee involvement was absent, was either not involved or is contorting the facts," Roger Delph said in the statement.

The minimum wage established by the bill, which still needs to be signed into law by Governor Newsom, will take effect in April.