Federal action on immigration, credit card swipe fees, and franchise liability would change what restaurants pay to operate, and the November 3 midterms reset the odds on all three. The election split control of Washington between the two parties for the final two years of the presidential term, which leaves most of the industry’s federal agenda facing a longer, harder path. Two national trade groups used the day after the vote to press lawmakers to move while the current Congress is still in session.
Immigration and the Labor Supply
The National Restaurant Association, which represents nearly one million locations and 15.7 million employees, is pushing for comprehensive immigration reform. Close to one in four restaurant workers is an immigrant, and labor supply is the constraint most operators feel first when hiring tightens. The association wants a framework that protects the current workforce, updates the work visa system, and creates a clearer path for future hiring. None of that advances quickly in a divided government, and the issue has stalled through several Congresses already. The enforcement pressure operators have felt over the past year makes the workforce question the most immediate of the three.
Swipe Fees and the Credit Card Competition Act
The association also backs the Credit Card Competition Act, reintroduced in January by a bipartisan group of senators and representatives and endorsed by the President. The bill would require the largest card issuers to let merchants route transactions over a second network, aimed at the processing fees that rank as the third-largest operating expense for many restaurants. The bill relies on network competition to push fees down instead of capping them, and it has repeatedly failed to attach to larger legislation, most recently when it was left out of a housing bill the Senate passed. Its bipartisan support gives it a better chance of surviving the new alignment than measures that break along party lines.
The American Franchise Act
The International Franchise Association is focused on the American Franchise Act, which cleared the House Education and Workforce Committee in July with bipartisan sponsors and more than 140 cosponsors. The bill would narrow the joint-employer standard so a franchisor counts as a joint employer only when it exercises substantial, direct, and immediate control over wages, hours, hiring, and discipline. For a franchisee, that line decides how much independence and legal exposure comes with the brand. “Congress has a narrow window to bring immediate relief” to franchise small businesses, IFA president and chief executive Matt Haller said. The current session’s remaining weeks are the clearest path for a bill that loosens employer liability, because control of the next Congress changed hands and a measure like this moves less easily under a new majority.
California Sets the Costs That Move a Valuation
For a San Diego or Orange County operator weighing a sale or a purchase, the state matters more than the federal outcome. California sets the cost variables that move a Southern California valuation, and those keep climbing regardless of what stalls in Washington. The state minimum wage rises to $17.40 on January 1, 2027, and the City of San Diego’s to $18.35, the next step in a stack of wage and regulatory increases signed into law through 2026. Federal gridlock does nothing to slow those, and it removes the near-term prospect of relief on the two federal costs operators feel most, labor supply and card processing.
A buyer underwriting a SoCal deal has to price it on the cost base that exists rather than on federal fixes that may not arrive during the hold period. That favors the capitalized, proven operators who have already absorbed the California stack. With 42 percent of restaurant operators reporting they were not profitable in 2025, according to the National Restaurant Association, the room to bet on policy relief is thin.
Sellers face the same situation from the other direction, where a clean set of books reflecting the current wage floor and today’s processing costs is what a serious buyer will underwrite. A restaurant valuation built on real numbers holds up better when the policy outlook is uncertain, and owners timing an exit over the next two years are better served planning around the costs they can see in California than the relief still stuck in Washington.
Sources
- QSRweb, “What the 2026 midterm results could mean for restaurants”
- Franchising.com, “U.S. House Committee Advances American Franchise Act”
- International Franchise Association, “IFA Applauds Committee Passage of American Franchise Act”
- U.S. Senator Dick Durbin, “Durbin, Marshall Reintroduce The Credit Card Competition Act”
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