On June 2, the Seattle City Council voted unanimously in favor of passing Seattle Mayor Ed Murray’s $15 dollar per hour minimum wage ordinance. The measure, which will be implemented over several years based on the size of the employer and the benefits offered, begins taking effect on April, 1 2015.
The ordinance, which unfairly defines franchisees and their employees as employees of the franchisor brand they are affiliated with, would force the approximately 600 franchisees in Seattle, which own 1,700 franchise locations employing 19,000 workers, to adopt the full $15 minimum wage in three years, while most other small business owners would have seven years to adopt the $15 wage.
The City Councils decision to pass the ordinance could unfairly and unjustifiably destroy the established franchise model in Seattle. Moreover, hundreds of franchise small business owners are being punished simply because they chose to operate as franchised brands. Decades of legal precedent have held that franchise businesses are independently owned businesses and are not operated by the brand’s corporate headquarters.
This unfair definition of franchises would put many franchisees out of business and would also eviscerate a franchise business model that has been responsible for creating small business opportunities for millions of Americans. To this point, the International Franchise Association (IFA) has formally filed a lawsuit on June 11, against the unfair and discriminatory Seattle minimum wage plan. To be clear, we are not seeking special treatment for franchisees; we only want equal treatment. Franchisees own the stores, not the chains – and should not be unfairly defined as big businesses. This law creates an uneven playing field for job creating franchisees and will ultimately harm the very people it is intended to help. Ultimately, franchisees wouldn’t be able to compete in the Seattle marketplace and many franchise small businesses will cease to exist.