Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: IFA seeks to bar Seattle from enforcing minimum wage law against small franchisees, (Aug 6, 2014)

By John W. Arden, J.D., LL.M.

The International Franchise Association (IFA) and five Seattle franchisees have asked the federal district court in Seattle to issue a preliminary injunction, preventing the City of Seattle from enforcing its new minimum wage ordinance against small franchised businesses.

According to the IFA’s August 5 motion for a preliminary injunction, the new ordinance raises the minimum wage to $15 per hour and phases in the increase over three years for large employers with more than 500 employees. The ordinance provides a seven-year phase-in period for employers with 500 or fewer employees.

The IFA’s main objection is that the ordinance discriminates against small franchised businesses by classifying them as large businesses if their franchise network collectively employs more than 500 employees nationwide. By treating a small franchised business differently from other small business, Seattle violates the Commerce Clause and the Equal Protection Clause of the Fourteenth Amendment, the motion contends. In identifying which small businesses are singled out for “uniquely unfavorable treatment” in terms of their use of federally-protected trademarks, the city allegedly punishes the businesses for exercising federal property rights and protected speech under the Supremacy Clause and the First Amendment.

Rather than asking the court to preliminarily enjoin the entire ordinance, the IFA and the franchisees seek to enjoin those provisions that discriminate against small franchised businesses.

Because of these “glaring problems” with the ordinance, the IFA and the franchisees are likely to prevail on the merits of their June 11 lawsuit or at a minimum raise “serious questions going to the merits,” the motion claimed. The violations of constitutional rights, by definition, amount to irreparable injury, according to the plaintiffs. “And the balance of hardships and public interest clearly supported granting the limited injunctive relief requested.”

The International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. Celebrating more than 50 years of education and advocacy, IFA uses public policy, media relations, and educational programs to protect, enhance, and promote franchising.

Attorneys: Paul D. Clement (Bancroft PLLC)

Companies: International Franchise Association

News: FranchisingDistribution WashingtonNews