Suit: The Minimum Wage Is A Ploy To ‘Break’ The Franchise Model

Connor D. Wolf | Reporter

Franchisees argued in an appeals court Tuesday that the Seattle $15 minimum wage doesn’t just disproportionately hurt their businesses, it was designed to be that way.

Seattle led the way in implementing a $15 minimum wage back in June of 2014. To help mitigate the potential for economic harm, the increase was written to phase in over the course of several years, with small businesses allowed extra time to adjust. Small businesses except individually owned franchisees.

“Hundreds of small, locally-owned businesses and thousands of their employees are unfairly threatened by Seattle’s new law,” The International Franchise Association President Steve Caldeira said back in June. “We are not seeking special treatment for franchisees, we are just seeking equal treatment.”

The association filed the lawsuit on behalf of several local franchisees. After the lawsuit was rejected by U.S. District Judge Richard A. Jones last year, the association began taking steps in March to appeal the decision.

The problem is, despite many franchisees being associated with large brand names like McDonald’s, they are actually small businesses. Franchising is unique because it allows a small business to contract with a large corporation in order to use its brand name and sell its products.

“The members of the advisory committee that developed the minimum wage law in Seattle have bashed franchises and admitted the law is designed to ruin a successful model that has created countless jobs,” Natalie Gillam, deputy communications director for AR Squared, said in a statement to The Daily Caller News Foundation. “Once again the ‘Fight for $15’ movement is revealed to be nothing more than an effort by union bosses to get a fatter payday.”

According to the lawsuit, some members of the advisory committee that developed the minimum wage law have admitted its meant to hurt franchises. Advisory member David Rolf allegedly said several times the city minimum wage is designed “to break the franchise model.”

The lawsuit also alleges that the increase will enable labor unions to more easily organize franchise employees. Along with being an advisory member, Rolf is also president of Local 775 of the Service Employees International Union.

“The only purposes of the Seattle wage ordinance are to provide for $15 minimum wages, lift working Seattleites out of poverty, and stimulate economic growth by putting more money into workers’ pockets,” Rolf said in a statement to TheDCNF. “I am completely agnostic about the franchise model. Every business, franchise or not, should be paying their employees enough to live a dignified life.”

Federal labor officials in the Obama administration have also been accused of trying to undermine the franchise model to help unions. Recent decisions by the National Labor Relations Board (NLRB) makes it easier for a franchise to be considered one large corporation instead of many small businesses that contract with a large corporation. This allows unions to organize one large employer instead of hundreds or thousands of small businesses.

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Tags : fight for international franchise association national labor relations board seattle
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