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San Francisco looks to alter chain store rules to help small businesses

By Madeleine Thomas

SAN FRANCISCO (Reuters) - City leaders in San Francisco are looking to modify limits on chain stores and eateries put in place by a 2006 vote of residents, as officials express concern some small businesses the measure was meant to protect are being unduly squeezed.

The proposed change could help smaller businesses, such as San Francisco Bay area-based Blue Bottle and Philz Coffee, expand on a small scale without being categorized under local rules as equivalent to a company such as Starbucks with its over 23,000 stores, city officials said.

San Francisco's chain store regulation is one of a number of measures designed to prevent runaway growth in the overwhelmingly liberal city of nearly 840,000 residents. Chain stores have been unpopular with many of the city's residents in recent years.

Under Proposition G, which was approved by voters in 2006, businesses with more than 11 U.S. locations that are looking to open at a site in San Francisco must submit to a time-intensive permitting process, including a public comment period, to determine how valuable the business would be to a neighborhood.

On Thursday, the city’s Planning Commission voted five to two to approve a proposal that would modify the definition of a chain store from 11 locations nationwide to 19 international locations, officials said.

This would allow small businesses to establish more locations before being designated as a chain store and subject to heightened restrictions when they look to open a new outlet in San Francisco, according to a Planning Department memo.

“We don’t want to ignore the benefits chain stores can provide in terms of jobs, but we recognize they can have a homogenizing effect on neighborhoods," said Kanishka Burns, formula retail project manager for the Planning Department.

"San Francisco is known for its unique neighborhoods and we want to make sure that’s retained,” she said.

Meanwhile, a competing measure also advanced on Thursday that would step up limits on chain stores. The proposal from San Francisco Supervisor Eric Mar was approved by the Planning Commission on a four to three vote.

Mar’s proposal seeks to maintain the current 11-store threshold but to include international locations in that count.

Both sets of regulations will go before the city’s Board of Supervisors for another vote, most likely in September.

(Editing by Alex Dobuzinskis)

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