American Apparel is clearly a chain store, or "formula retail", by the City of San Francisco's definition. It has 11 or more locations nationwide and maintains "two or more of the following features: a standardized array of merchandise, a standardized facade, a standardized decor and color scheme, uniform apparel, standardized signage, a trademark or a servicemark."
In order for a chain location to be allowed in the Haight's commercial district, a company must file for and be granted a conditional use permit. The law was approved in 2006, after American Apparel arrived in 2004. So it didn't need to file for a conditional use permit since its location predates the requirement, the San Francisco Planning Department tells us by email.
But a complaint was filed with the department back in 2011 regarding its lack of said conditional use permit. At this point the city appears to have realized that American Apparel separately didn't have an original building permit on file correctly, and asked it for documentation to prove how long it had been there. Based on our reading of the department's file (which we've uploaded for you, here), nothing further happened until last summer.
Then in mid-July, American Apparel attempted to expand its sales area into the basement, but this ran afoul of other zoning laws and prompted a separate complaint.
The city then saw that the original documentation wasn't filed, and began following up, according to a person we spoke with at American Apparel's Haight Street location. The company got into gear.
On February 4th of this year, it filed to get the property a conditional use permit with the city. Last week, according to the file, it met with a city planner to discuss it further.
At this point, the city hasn't decided if the location will be grandfathered in as originally intended (it tells us the regulations were not meant to be retroactive), or if the permitting issues will lead to the sort of scrutiny that new formula retail proposals get these days when they move into designated neighborhoods. A public hearing and appeals process, for example.
So far, the Planning Department says that the building owner and tenant were "being responsive," so it has chosen not to begin fining the company the usual $250 per day for violating the conditional permit rules. (If you're trying to do math in your head, that adds up to $247,750 if you just tally the fines back to the 2011 complaint. )
For now, American Apparel can be happy about not getting such a bill, while anti-formula-retail neighbors can be happy that the location is under extra scrutiny.