Federal Judge Refuses Slower Phase-in of $15 Minimum Wage for Franchisees

Posted by Sean P. CecilMar 18, 20150 Comments

A franchisee trade group sued the City of Seattle and demanded an injunction preventing the City from classifying them as "large businesses" under the City's $15 Minimum Wage ordinance which provides for different phase-in schedules based upon business size. The businesses sought a court order to enjoin the classification while the case is pending in the Western District of Washington, but the motion was denied by Judge Richard Jones yesterday in a 44-page memorandum opinion in International Franchise Association, Inc. v. City of Seattle, Case no. C14-848 RAJ. 

A preliminary injunction is an extraordinary remedy, and must be supported by a finding that the requesting party is likely to succeed on the merits of the case and would suffer irreparable harm if the injunction is denied, the balance of equities is in its favor, and that an injunction is in the public interest. Judge Jones specifically noted that Plaintiffs' claims of irreperable harm were conclusory and not based upon "facts in the record." The court rejected every single argument by the franchisees, and noted the City has a rational basis for treating as large businesses franchisees who would not otherwise meet the ordinance's definition, dismissing the plaintiff's argument that was based in part upon a quote by Socialist city council member Kshama Sawant: 

"It's important, before we get lost in to this false idea that franchisees are somehow struggling businesses, we should look at the evidence here, which compiles McDonald's, Burger King, and Wendy's owners in Seattle…Just six companies own every franchised big burger chain in Seattle, and those six companies own a total of 236 locations all across the country. These are not small businesses. And a McDonald's franchise requirement is $750,000 of personal wealth, not borrowed money, and [a] $45,000 franchisee fee, 40% of the total cost to open a new restaurant must be paid in cash. Now yes, it's true that the McDonalds headquarters, corporate headquarters, takes away the lion's share of the profits, but in order to be a franchisee, you have to be very, very wealthy. Just a small business person of color from Rainier Beach is not going to be able to afford to open a franchise outlet."

The City of Seattle's $15/hr minimum wage will be the first of its type in the nation when it takes effect April 1, 2015.