Franchisors “have the ability to use their greater financial resources to support the franchise by aiding franchisees during time of business stress…”
With remarks that included this quote, U.S. District Judge Richard A. Jones ruled on how Seattle’s minimum wage increase law will be rolled out. The International Franchise Association and several Seattle franchisees requested to suspend a portion of Seattle’s law that required franchisees to adopt a higher minimum wage at a faster rate. Overall, the city’s minimum wage will increase to $15/hour. Businesses with 500 or more employees must raise the rate at a faster pace than small companies.
In hearings a week ago, the IFA and some franchisees argued that franchisees are small businesses and therefore should not have to raise minimum wages at the same pace as bigger companies. Judge Jones ruled the possible harm to the franchises “does not outweigh the concrete harm” that would be suffered by employees who are entitled to an increase in wages under the law.
The minimum wage law, passed in June 2014, will take effect April 1. The franchise industry may continue to battle the law in the future, but it will have to be after it takes effect.