Are companies run by franchisees small businesses or big businesses? Seattle's lawmakers and franchisees can't agree – so they're fighting it out in court.
The International Franchise Association (IFA) filed a preliminary injunction on Wednesday to block portions of the city's new minimum-wage law that treat local franchises the same way as large companies that have over 500 employees.
The IFA argues that by grouping franchisees with large companies in the rollout of the new law to raise minimum wage to $15 per hour, Seattle is discriminating against this subset of small businesses. While most small businesses have seven years to raise employee pay, franchisees have been forced to raise wages within three years.
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The IFA and five Seattle franchisees filed a lawsuit against the U.S. District Court in Seattle in June arguing that certain businesses are being discriminated against due to their franchised status. However, due to the limited timeframe for franchisees to prepare for increased labor costs, the IFA decided to additionally file for an immediate injunction.
"The ordinance is clearly discriminatory and severely hurts hard-working small business owners who are franchisees," said IFA president Steve Caldeira in a statement. "This shortcut cannot be accomplished through a city ordinance and our lawsuit – and now our motion for preliminary injunction – will provide franchise small business owners their rightful opportunity to present this case in court."
Neither the lawsuit nor the injunction attempt to oppose the aspects of the law that increase minimum wage. Instead, they are focused solely on how the law will affect franchisees, and the larger question about how to classify franchises at all.
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