Issues




Kansas City

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The Situation

Kansas City Mayor Sly James recently distributed a minimum wage proposal, Committee Substitute for Ordinance 150217, to the City Council. The proposed ordinance, which closely resembles Seattle's current minimum wage ordinance, attempts to increase the minimum wage to $13 per hour by 2020 for businesses employing 250 people or more, while businesses with less than 250 employees have until 2021 to implement the increase.

The ordinance discriminates against franchisees by classifying them as large employers with their franchisors, disadvantageously forcing them to implement the wage at a faster rate than non-franchise small businesses. IFA President & CEO Steve Caldeira wrote a letter to Mayor James, urging him to reconsider the proposal so as to provide equal treatment and implementation of any wage increase. Furthermore, a recent poll done by Remington Research Group found voters opposed arbitrary and discriminatory treatment of franchise businesses by a wide margin.



Seattle

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The Situation

On June 2, the Seattle City Council voted unanimously in favor of passing Seattle Mayor Ed Murray’s $15 dollar per hour minimum wage ordinance. The measure, which will be implemented over several years based on the size of the employer and the benefits offered, begins taking effect on April, 1 2015.

The ordinance, which unfairly defines franchisees and their employees as employees of the franchisor brand they are affiliated with, would force the approximately 600 franchisees in Seattle, which own 1,700 franchise locations employing 19,000 workers, to adopt the full $15 minimum wage in three years, while most other small business owners would have seven years to adopt the $15 wage.

The City Councils decision to pass the ordinance could unfairly and unjustifiably destroy the established franchise model in Seattle. Moreover, hundreds of franchise small business owners are being punished simply because they chose to operate as franchised brands. Decades of legal precedent have held that franchise businesses are independently owned businesses and are not operated by the brand’s corporate headquarters.

This unfair definition of franchises would put many franchisees out of business and would also eviscerate a franchise business model that has been responsible for creating small business opportunities for millions of Americans. To this point, the International Franchise Association (IFA) has formally filed a lawsuit on June 11, against the unfair and discriminatory Seattle minimum wage plan. To be clear, we are not seeking special treatment for franchisees; we only want equal treatment. Franchisees own the stores, not the chains – and should not be unfairly defined as big businesses. This law creates an uneven playing field for job creating franchisees and will ultimately harm the very people it is intended to help. Ultimately, franchisees wouldn’t be able to compete in the Seattle marketplace and many franchise small businesses will cease to exist.



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