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Without Free States, Some Businesses Would Starve

BY HANNAH COX

March 16, 2016 10:32AM

Tourists aren’t the only ones flocking to Nashville these days. CKE Restaurants, the parent company of the famous fast food chains Carl’s Jr. and Hardee’s, has joined a growing list of corporations relocating to Tennessee as of late. This mass migration comes as no surprise to Tennessee residents, who have long benefitted from the state’s business friendly environment and lack of onerous labor regulations.

CKE Restaurants was founded and incorporated in California, where the company has operated for more than 70 years. However, in a June interview with the Wall Street Journal, CKE Restaurants’ CEO Andrew Puzder stated that his company would cease expanding its stores in California due to the state’s stringent and punitive business regulations.

Government regulations in California have placed undue strain on companies that has led to many businesses choosing to flee the state. These regulations include strenuous hurdles such as extraordinarily long waiting periods for business permits, mandates on the percentage of time a manager spends carrying out certain duties, and increasingly excessive economic burdens levied on businesses due to Obamacare. Many business leaders within the state, including Mr. Puzder, have even claimed that California’s labor regulations “appear designed to encourage litigation,” a claim that’s hard to argue considering CKE has spent $20 million over the past eight years alone fending off class-action lawsuits in the state.

Mr. Puzder, who is also a respected economist, took charge of the company in 2000 following his brokerage of a financial deal that saved Carl Jr.’s founder from financial ruin. During Puzder’s tenure, the company has undergone a substantial reversal of fortune and has seen revenues increase by 3.6%. Last year the company raked in $1.3 billion in revenue. To date, the CKE system includes more than 3,664 franchised or company-operated restaurants in 44 states and 38 foreign countries and U.S. territories. This is quite the impressive turnaround from the struggling company that was $700 million in debt when Mr. Puzder took over.

But while Mr. Puzder has pulled off an incredible feat and brought about remarkable change within his organization, there is only so far a business can rise when bogged down by hefty regulations. Fortunately for business leaders and entrepreneurs across the nation, there are still states like Tennessee that believe in allowing the free market to work and businesses to thrive.

CKE Restaurants is exactly the type of business that states hope to attract, and Tennessee is proud to add the business to our growing community of innovative companies and thought leaders. We’d like to be the first to extend a warm welcome to CKE, and we also hope this move serves as a reminder for why Tennessee attracts so many businesses. Perhaps even more companies would consider relocating from liberal states if we were to repeal the pesky Hall Income Tax, which currently hits business owners particularly hard.