Seattle Says Franchises Aren't Small Businesses, Forces Them on $15 Wage Fast Track The International Franchise Association is filing a lawsuit opposing Seattle's plan, which forces franchises to adopt a $15 minimum wage in three years.
By Kate Taylor
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Minimum wage has been a hot-button issue in the last year for franchises across the country. Now, after months of protests and counter-protests, franchises in one major city are being forced to make changes – and being told that they aren't small businesses.
On Monday, the Seattle City Council unanimously passed an ordinance to increase the city's minimum wage to $15 per hour, the highest in America.
The plan gives small-business owners seven years to adopt the $15 wage, but gives franchise owners only three years. Why? The new rules treat franchises as businesses with more than 500 employees nationally, thereby holding them to different standards.
Arguing that franchisees should be grouped with other small-business owners, the International Franchise Association announced plans to file a lawsuit against the city of Seattle.
Related: Switzerland Mulls Setting Minimum Wage at $24.73
"These hundreds of franchise small-business owners are being punished simply because they chose to operate as franchisees," the trade group's CEO Steve Caldeira in a statement. "Decades of legal precedent have held that franchise businesses are independently-owned businesses and are not operated by the brand's corporate headquarters."
The IFA reports that the minimum wage increase will affect 600 franchisees in Seattle who own 1,700 franchise locations and employ 19,000 workers.
Over the past year, the IFA has fought against minimum wage hikes across the U.S., arguing that many franchised businesses operate on thin profit margins and that businesses should be able to independently determine competitive wages within their local economies. Meanwhile, local and national governments have been pushed by labor advocates, including fast-food franchise employees, to raise the minimum wage.
Related: How a $15 Minimum Wage in Seattle Could Leave Workers Worse Off
