New York is Trying to Force Big Fast Food Franchises to Share the Risk

The state of New York has introduced major legislation affecting the quick-service industry. This proposal (Senate Bill S7289), creates the “New York State Fast Food Franchisor Accountability Act.” It’s currently moving through the 2025-2026 Legislative Session.

This is important news for the entire franchising sector. Read why.

Key Takeaways

The law’s goal is simple. It seeks to establish joint and several liability for large fast-food franchisors.

This means that franchisors can be held legally and financially responsible. They’ll be liable for certain labor and safety violations committed by their independent franchisees.

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Note: This represents a significant shift in legal risk. It forces large corporations to share accountability for workplace standards.

With that in mind, here are the most critical facts you need to know about New York Senate Bill S7289:

• Joint Liability Established: The bill holds large fast-food franchisors jointly and severally liable for certain labor, safety, and human rights violations committed by their franchisees.
• Targeted Chains Only: This legislation applies strictly to “fast food chains” that operate 50 or more establishments nationally. Small or independent chains are not included.
• Broad Coverage: The franchisor can be held liable for violations of the Labor Law (wages, sick leave), Workers’ Compensation Law, Human Rights Law (discrimination), and various safety orders.
• No Contractual Escape: Any clause in a franchise agreement that attempts to waive this liability or force the franchisee to indemnify the franchisor is void and unenforceable.
• Franchisee Relief: Franchisees can legally challenge the franchisor if they can prove the franchise agreement’s terms create a substantial barrier to complying with the law.
• Current Status: The bill is currently moving through the New York State Senate (2025-2026 Session). It is not yet law but is a major legislative priority.

New York State Fast Food Franchisor Accountability Act: Defining Who is Affected

The bill is highly specific about which businesses it targets. It focuses on the largest entities in the industry.

In this case, a “fast food chain” is precisely defined. It must be a set of restaurants. And a “fast food restaurant” is an establishment in New York State. It must be part of one of these chains.

In addition, this set must consist of 50 or more establishments nationally. These establishments must share common branding. They can also be characterized by standardized operations. This includes standardizing decor, marketing, and products.

Furthermore, its regular business must involve primarily providing food or beverages. And the food must be for immediate consumption. This can be on-premises or off-premises. The customers typically order and pay before eating. And the items are often prepared in advance or heated quickly.

Finally, this definition aims to capture the classic quick-service business model.

The Scope of Joint Liability

Under this proposed act, a fast-food franchisor becomes responsible for ensuring compliance. They must ensure their franchisee complies with a list of applicable laws.

For example, if a franchisee is liable for a violation, the franchisor becomes jointly and severally liable for fines or penalties.

In this case, the covered laws and regulations are extensive. They include:

• All applicable sections of the Labor Law. This covers many fundamental worker rights. This includes rules for minimum wage and overtime pay. It also covers the New York State Paid Sick Leave Law. Other covered laws include the New York Prenatal Leave Law and the Lactation Accommodation Law.
• The Workers’ Compensation Law. Franchisors must ensure their franchisees comply with these insurance and safety requirements.
• Article 15 of the Executive Law (Human Rights Law). This relates to employment discrimination and other protections.
• Orders issued by the Governor. This includes emergency and executive orders. These orders must concern employment standards or worker safety.
• Orders issued by a county or municipality. These local orders also relate to employment standards or worker safety.

The law can be enforced against the franchisor to the same extent it is enforced against the franchisee. This creates a direct legal path to hold the franchisor accountable.

New York State Fast Food Franchisor Accountability Act: Protection for the Franchisee

The New York State Fast Food Franchisor Accountability Act includes provisions designed to protect the franchisee. It recognizes that the terms of a franchise agreement can sometimes impede compliance.

Note: One of the reasons I published this article, is to point out the importance of hiring and maintaining a business relationship with a competent franchise attorney. Doing so will help you a lot. Let’s continue.

A franchisor is generally prohibited from shifting liability. A waiver of this new law by the franchisee is contrary to public policy.

This means that any agreement by a franchisee to indemnify the franchisor is void and unenforceable. This means franchisors cannot simply write a clause into the contract to escape the new liability. In a nutshell, the bill offers a specific remedy for the franchisee. This:

If the terms of a franchise prevent or create a substantial barrier to a franchisee’s compliance with the covered laws, the franchisee can take action. They may file for monetary or injunctive relief against the franchisor.

There is also a key presumption established in the bill.

Specifically, there is a rebuttable presumption that any changes to the franchise terms that increase the franchisee’s costs create a substantial barrier to compliance. This shifts the burden of proof to the franchisor.

The Current Status of the New York State Fast Food Franchisor Accountability Act

Senate Bill S7289 was introduced on April 8, 2025. It’s been committed to the Committee on Labor. But it is not yet law.

That said, it signals a strong legislative push. It aims to restructure accountability in the fast-food franchise model. Businesses that fit the “fast food chain” definition should monitor its progress closely. This is a potential new obligation for them in New York State.

Note: I’m not an attorney. Nothing in this article or anywhere on this website should be construed as legal advice.

FAQ’s

(Note: I used an AI tool to help me summarize the proposed law/bill.)