Goshen News, Goshen, IN

Business

June 30, 2014

Minimum wage issue pits franchisees against cities

NEW YORK — Hundreds of franchisees are learning they’re not small businesses, at least in the eyes of city government.

A new law that will raise Seattle’s minimum wage to $15 from the current $9.32 gives small businesses more time to phase in the 61 percent increase — seven years versus three for large companies. But franchisees, which have ties to bigger corporations like restaurant chain Denny’s, Dunkin’ Donuts and Merry Maids won’t get the reprieve even if they have just a handful of workers.

It’s an issue that could affect thousands more businesses in cities where campaigns for a higher minimum wage are underway. In Chicago, lawmakers have proposed a similar measure that would exempt small businesses but not franchise restaurants. Franchise owners say the laws will sharply increase their payroll costs, and threaten to make them less competitive with independent businesses that won’t have to comply — and that they could be forced to raise prices and cut jobs.

“It’s unfair, arbitrary and discriminatory against franchise owners,” says Steve Caldeira, CEO of the trade group International Franchise Association.

The IFA has filed a federal lawsuit seeking to overturn the Seattle law, arguing it violates the U.S. Constitution by treating franchises and other small businesses unequally. The IFA also opposes the law proposed for Chicago and efforts to pass similar laws in other major cities including Boston, Philadelphia and San Francisco.

In the eyes of the U.S. Small Business Administration, franchises are small businesses. Many franchises are owned by people who have at most a few locations. Some owners are corporations that own dozens or even hundreds of restaurants like McDonald’s or Pizza Hut.

It’s the ties to bigger companies — known as franchisors — that supporters of the laws cite as a reason why individual franchise owners shouldn’t get a break.

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Poll

Last weekend (July 12) the Goshen Parks Department held its Kid’s Try-athlon to promote childhood fitness and this week (July 18) the new bicycle trail is open to the fairgrounds in Goshen, offering residents a healthy way to get to the annual agriculture exposition. Have you joined the local fitness movement?

Yes, I work at eating healthy and exercising
No, I am happy with my fitness level
Changing my diet and exercise frequency is a work in progress
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