When Minimum Wage Laws Count Small Franchisees as Big Business

The recent movement in Seattle and other cities to raise the minimum wage has franchise owners rankled. It’s not just that they’ll have to pay workers as much as $15 an hour. It’s that franchise business owners won’t get the same grace period to raise wages that other small businesses will.

Imagine a block with three stores: A corporate-owned Starbucks, a McDonald’s franchise, and a local pizza shop. The Seattle law treats the Starbucks and McDonald’s the same—they have to pay $15 an hour by 2017 (or 2018, if they provide health benefits)—but gives the pizzeria until 2021 to absorb the hike. Franchises, which license a brand and share revenue with their corporate headquarters but are owned independently, believe they’re more like the pizza shop than the Starbucks.