Should franchisees be given the same benefits as independent small businesses? Or does their corporate name and affiliation make them more like large businesses?
That question is sparking controversy in the rollout of Seattle’s new $15 minimum wage. Large companies have three years to implement the law, while businesses with 500 or fewer employees have seven years. However the law gives all franchisees—regardless of their employee count—only three years to comply.
The International Franchise Association (IFA), a trade group, has filed a lawsuit against the city over the rollout and has launched a campaign called Seattle for Franchise Fairness. IFA President Stephen Caldeira says the minimum-wage law “discriminates” against franchisees. “Franchisees own the stores, not the chain—and should not be unfairly defined as big businesses,” he wrote in a letter on the campaign’s web site. “This ordinance means that franchisees cannot compete in the Seattle marketplace and many franchise small businesses will cease to exist.”
IFA sent a letter to Chicago City Council members suggesting the group might be prepared to sue if the city enacts its proposed $15 minimum wage ordinance, which also treats small franchisees like large companies.
Matthew Hollek, owner of several Subway stores in the Seattle area, argues that the new law disregards the fact that most franchisees face the same challenges as other small businesses, including paying taxes, hiring employees and struggling to make ends meet. “Unfortunately, advocates for a higher wage continue to cherry-pick data to make their argument against franchise businesses,” he wrote in a guest column in The Seattle Times. “The franchise business model has helped thousands of us to become our own boss and realize the American dream of running our own business. It’s insulting to hear advocates suggest that I am not my own boss.”
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