Business View - March 2015 63
businesses that they actually are. Seattle’s ordinance
requires large businesses, defined as those with more
than 500 employees, to raise the minimum wage they
pay their employees to $15 an hour over three years.
The ordinance is scheduled to take effect April 1.
Smaller businesses have seven years to phase in the
$15 wage increase. However, the Seattle law treats a
single hotel, print center, restaurant or in-home health
care provider as though it employs more than 500 peo-
ple if it is a franchise. This is the heart of the uneven
playing field created by the ordinance.
“Our lawsuit has nothing to do with the minimum wage
increase to $15 and everything to do with creating a lev-
el-playing field for franchisees so they can continue to
operate as the independent, locally-owned businesses
that they actually are,” said Caldeira. “We are not look-
ing for special treatment for our hard-working franchi-
sees with under 500 employees, but equal treatment
with the non-franchised businesses that also have un-
der 500 employees. It is very unfortunate that the Ser-
vice Employees International Union exerted so much
influence over the City and use the minimum wage
ordinance as a vehicle to break the franchise model
to unionize workers at independently-owned and op-
erated small businesses. We are simply attempting to
stop that injustice and level the playing field for these
job-creating, local Seattle business owners.”
The lawsuit contends that the city’s ordinance violates
the Commerce Clause of the U.S. Constitution because
it categorizes small, independently-owned franchise
owners as big, out-of-state businesses. The lawsuit
also argues that the Seattle ordinance defies years
of legal precedent that clearly define a franchisee as
an independent local business owner who operates
separately from its franchisors. Franchisors provide
brand and marketing materials and charge an initial
franchise fee and ongoing royalty payments to use the
brand’s trademark.
The plaintiffs’ motion for a preliminary injunction,
which was filed in August of last year, asserts that the
ordinance’s arbitrary definition of small businesses vio-
lates not just the Commerce Clause but also the Equal
Protection Clause of the U.S. Constitution, as well as
Washington State’s Constitution. The motion also con-
tends that an injunction would be in the public interest
and that franchisees will suffer “irreparable harm” un-
less a limited preliminary injunction is granted, given
their accelerated adoption of the minimum wage in-
crease.
Under the proposed preliminary injunction, small fran-
chise business owners would pay the same minimum
wage just like any other small businesses while the liti-
gation is ongoing.
FRANCHISE
