IFA Vows to Keep Fighting to Halt Seattle’s Discrimination Against Local Franchise Businesses



The International Franchise Association, the world’s largest organization representing franchise owners, vowed to keep fighting to block the city of Seattle from discriminating against small franchised businesses as part of the city’s 2014 minimum wage law, after the group’s request for a preliminary injunction was denied yesterday in federal court.

IFA and five Seattle franchisees sued Seattle in June 2014, seeking to block portions of the city’s new law to increase the city’s minimum wage to $15 an hour. The plaintiffs asked the court to enjoin the city from treating franchisees as large, national companies rather than the small, locally-owned businesses that they are.

“Yesterday’s decision is clearly a disappointment but it is not the end of this fight,” said IFA President & CEO Steve Caldeira, CFE. “The ordinance is clearly discriminatory and would harm hard-working small business owners who happen to be franchisees. Those who have set out to destroy the long-accepted, time-tested and proven franchise business model must be stopped. IFA will continue to fight against discrimination of small business owners in Seattle and elsewhere. It was never about Seattle raising the minimum wage to $15 wage, but rather the increase applied in a discriminatory way.”

Seattle’s new law, which takes effect April 1, requires large businesses; defined as those with more than 500 employees, to raise the minimum wage they pay their employees to $15 an hour over three years starting in April 2015. Smaller businesses will have seven years to phase in the wage increase.

However, the Seattle ordinance unfairly requires Seattle’s 600 franchisees, who own 1,700 franchise locations and employ 19,000 workers, to meet the faster three-year deadline for large businesses simply because they operate as part of a franchise network. These small, locally-owned businesses would be treated as large, national companies under the law due to their affiliation with a franchise network. This affiliation, IFA contends, is violates the Commerce Clause of the U.S. Constitution, given 96 percent of the franchises operating in Seattle are affiliated with an interstate commerce network.

The IFA lawsuit argues that the Seattle ordinance defied years of legal precedent clearly defining a franchisee as an independent local business owner who operates separately from its franchisor, which provides brand and marketing materials. IFA also contended that this categorization violated the Equal Protection Clause of the U.S. Constitution, as well as Washington State’s Constitution.

Caldeira said IFA will continue to pursue legal avenues to win a permanent injunction against the portions of Seattle’s ordinance that apply to small business franchises.

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