What Franchisees Could Lose If the Minimum Wage Is Raised As fast-food workers prepare to strike in 100 cities this Thursday, franchisees and business owners grapple with the minimum wage question.

By Kate Taylor

Opinions expressed by Entrepreneur contributors are their own.

Fast-food workers in about 100 cities will strike on Thursday, leaving franchisees caught between a rock and a hard place.

Protesters are calling for $15 an hour -- a huge increase from the current federal minimum wage of $7.25, or a full-time salary of about $15,000 a year. The upcoming strikes follow the protests that occurred in July and August.

While mega-chains have been painted as multi-million dollar villains in the protests, it is usually individual franchisees, often struggling with slim profit margins, who are forced to make the hard decisions on employee wages. For these small business owners operating with small budgets and fixed costs, a mandated increase in minimum wage cuts into profits and threatens business. It could also result in higher prices for customers.

"Raising the minimum wage will only hurt those it is intending to help," says Matthew Haller, vice president of public affairs at the International Franchise Association, an industry group. "Increasing the cost of labor in the current economy would lead to higher prices for consumers, lower foot traffic and sales for franchise owners, and ultimately lost-entry level jobs."

Related: Raising the Minimum Wage Isn't a Magic Bullet

Business owners in general are divided on raising the minimum wage. A November Gallup poll found that small-business owners were split nearly 50-50 on raising the minimum wage to $9.50 an hour from the current $7.25. Forty-seven percent approve of a law that would make the change, while 50 percent disapprove.

For franchise owners, there's a fine line between what they might like to pay their employees and what they realistically can pay without damaging profits. At the same time, they have to pay competitively enough so that they aren't constantly wasting money hiring and training employees. "If you keep paying people low wages… you'll blow through employees, which costs a lot of time and money," says franchise ownership adviser Joel Libava. As for potential price increases on consumers, Libava is skeptical of the long-term effects on business owners. "Would consumers pay 25 cents more for a hamburger if prices go up? Probably."

Indeed, a number of large businesses see an increased minimum wage as a pro-business position. Companies including superstore Costco and ice cream franchise Ben & Jerry's have signed Business for a Fair Minimum Wage's petition to raise minimum wage for all workers. According to Ben & Jerry's website, employees are paid what the company considers to be livable wages: $15.97, twice the national minimum wage.

"Paying your employees well is not only the right thing to do but it makes for good business," said Jim Sinegal, CEO of Costco in a statement on Business for a Fair Minimum Wage's website.

Will fast-food franchisees agree? Thus far, there have been few measurable effects from the highly publicized protests. However, as more cities are involved and media coverage increases, franchisees may find themselves echoing Sinegal—or struggling to find a way to balance increased wages and continued profit.

Related: 5 Reasons the Fast-Food Worker Protests Are Off Base

Kate Taylor

Reporter

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.

Side Hustle

This Husband and Wife's 'Happy Accident' Side Hustle Hit $467,000 Revenue Fast — Now It Makes Over $1 Million a Year: 'We're Scrappy'

Charlene and Vince Li couldn't find the snack they wanted to see on the shelves, so they created it themselves.

Growing a Business

'Boring' Businesses Are Making Millionaires — and You Can Borrow Their Strategies For Success

The silent growth strategy reveals how understated, steady businesses are quietly creating wealth for entrepreneurs in 2025. By focusing on long-term consistency and incremental progress, these "boring" industries are proving to be gold mines for those willing to embrace stability over hype.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Business News

YouTuber MrBeast Makes More Money From His Side Hustle Than From His YouTube Videos

The 26-year-old creator has racked up hundreds of millions of views and subscribers on YouTube, but it isn't his main moneymaker.

Business News

JPMorgan CEO Jamie Dimon Says Only One Group Is Complaining About Returning to the Office

In a new interview, Dimon said remote work "doesn't work" and noted some JPMorgan employees were checking their phones while he was speaking in a meeting.

Growing a Business

How to Make Your Business Look Bigger Than It Is — Without Faking It

Perception shapes reality in business. A polished, credible brand attracts customers, investors and media attention — even if your team is small. But how do you project strength and scale without resorting to deception? Here's what you need to know.