The City Council of Arcata, California has voted to refine existing legislation which limits the number of formula restaurants allowed in the city and the locations where they may be sited. The amendments are intended to tighten loopholes that currently allow, e.g., a chain pizza restaurant and a chain chicken restaurant to operate without restriction. (See story from the Lost Coast Outpost here.)
During the city council hearings on the ordinance changes, at least one councilmember raised the issue of possible adverse impacts for local businesses, but the City has not identified an acceptable legal workaround for locally-owned restaurants that meet the City's definition of a formula restaurant. One consideration that often deters local governments from drafting provisions that seemingly favor local businesses over others is the concern of potential legal claims under the so-called "Dormant Commerce Clause."
Some proponents of local legislation to restrict formula restaurants favor the laws as a way to hold community space for restaurants with healthier offerings. When communities have that goal in mind, they need to be careful in drafting definitions of covered establishments in ways that do not unnecessarily limit chain restaurants with the types of healthy options they want to promote.