Get All Access for $5/mo

Franchises Lose Bid to Block Part of Seattle's Minimum Wage Rollout Franchise owners in Seattle are still on track to be grouped with large businesses under the city's new minimum wage law.

By Kate Taylor

Opinions expressed by Entrepreneur contributors are their own.

A judge finally released a decision on how the minimum wage rollout will affect franchises in Seattle – and it's not looking good for franchisees.

On Tuesday, a federal judge rejected a request from the International Franchise Association (IFA) and five local franchisees to suspend a portion of Seattle's law that put franchise owners on the fast track to a $15 minimum wage. As a result, Seattle franchisees will still be grouped with companies that have 500-plus employees, and therefore expected to hike employee pay within the next three years.

Franchisees argued that, as local businesses, they ought to be grouped with small businesses and given at least seven years to raise wages to at least $15 per hour. However, U.S. District Judge Richard A. Jones determined that there was no evidence that the minimum wage law discriminated against franchisees, and therefore no grounds for a preliminary injunction.

Franchisors "have the ability to use their greater financial resources to support the franchise by aiding franchisees during time of business stress, including identifying and responding to changed business conditions," Jones wrote in the ruling. As a result, he determined that Seattle lawmakers could have "reasonably conceived" that franchisees would be in a greater position than other small businesses to accommodate the faster phase-in schedule.

Related: Franchise Industry Not Without Hurdles in 2015

The IFA and franchisees argued that the minimum wage hike purposefully targeted franchised companies, pointing to minimum wage committee member's derogatory comments on franchised companies and the Service Employees International Union's efforts to take down franchises. However, Jones determined that such comments were isolated and represented the viewpoints of independent citizens – not lawmakers.

"Yesterday's decision is clearly a disappointment but it is not the end of this fight," IFA president Steve Caldeira said in a statement. "The ordinance is clearly discriminatory and would harm hard-working small business owners who happen to be franchisees.

The minimum wage law, passed in June 2014, will take effect on April 1. The IFA and local franchisees had requested a preliminary injunction hoping to suspend the law prior to April. However, now it looks like the franchise industry is going to have to continue the battle after the law goes into effect. The IFA says it plans to pursue legal channels to win a permanent injunction against portions of the law that apply to small business franchises.

Related: Why the International Franchise Association Is Suing Seattle

Kate Taylor


Kate Taylor is a reporter at Business Insider. She was previously a reporter at Entrepreneur. Get in touch with tips and feedback on Twitter at @Kate_H_Taylor. 

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick


ChatGPT is Becoming More Human-Like. Here's How The Tool is Getting Smarter at Replicating Your Voice, Brand and Personality.

AI can be instrumental in building your brand and boosting awareness, but the right approach is critical. A custom GPT delivers tailored collateral based on your ethos, personality and unique positioning factors.

Business News

Apple Reportedly Isn't Paying OpenAI to Use ChatGPT in iPhones

The next big iPhone update brings ChatGPT directly to Apple devices.

Business News

Is the AI Industry Consolidating? Hugging Face CEO Says More AI Entrepreneurs Are Looking to Be Acquired

Clément Delangue, the CEO of Hugging Face, a $4.5 billion startup, says he gets at least 10 acquisition requests a week and it's "increased quite a lot."

Business Ideas

63 Small Business Ideas to Start in 2024

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2024.

Side Hustle

'The Work Just Fills My Soul': She Turned Her Creative Side Hustle Into a 6-Figure 'Dream' Business

Kayla Valerio, owner of vivid hair salon Haus of Color, transformed her passion into a lucrative venture.

Business News

Sony Pictures Entertainment Purchases Struggling, Cult-Favorite Movie Theater Chain

Alamo Drafthouse originally emerged from bankruptcy in June 2021.