Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION NEWS: IFA will appeal to stop Seattle from enforcing minimum wage law against franchisees, (Mar 23, 2015)

By Linda O’Brien, J.D., LL.M.

International Franchise Association (IFA), the world’s largest organization representing franchise owners, will appeal a recent federal court decision that allows the City of Seattle to enforce its 2014 minimum wage law against small franchised businesses, the association announced on March 20.

In 2014, the City of Seattle increased the minimum hourly wage from $9.47 to $15. The increase goes into effect April 1, 2015, with a faster phase-in over three years applicable to large businesses — defined as those with 500 or more employees nationwide — and a slower phase-in over seven years applicable to small businesses.

Seattle’s franchisees— who own 1,700 franchise locations and employ 19,000 workers —were considered large businesses based on their franchise networks collectively having more than 500 employees nationwide. Thus, they were held subject to the faster, three-year phase-in schedule.

IFA filed suit against the City, arguing that the categorization of franchisees as large businesses was discriminatory and seeking to enjoin application of the discriminatory provisions against small franchised businesses (International Franchise Association, Inc. v. City of Seattle, Dkt. No. C14-848-RAJ).

On March 18, the federal district court in Seattle denied IFA’s motion for preliminary injunction, finding that it was unlikely that the IFA would prevail on the merits of its claims against the City. The IFA and five Seattle franchisees gave notice that they will appeal the decision to the United States Court of Appeals for the Ninth Circuit.

“Franchisees deserve fairness under the law and we will continue to aggressively advocate on their behalf in federal circuit court,” IFA President & CEO Steve Caldeira said. “We are not seeking to prevent Seattle’s minimum wage increase from going into effect. Our appeal will be focused on the blatant discriminatory mistreatment of franchisees under Seattle’s new law and the City’s improper motivation to discriminate against interstate commerce."

“Franchisees compete for the same customers as non-franchised businesses in Seattle, and they face the same challenges other small businesses face and this regulation puts them at a severe economic disadvantage,” Caldeira stated. “Therefore, we believe they should be properly categorized as such. Put simply, a small local franchise owner with 10 employees is the same as the small non-franchise business owner.”

Companies: International Franchise Association

News: FranchisingDistribution WashingtonNews