Friday, December 26, 2014
FAIRFIELD-SUISUN, CALIFORNIA
99 CENTS

Small talk: Minimum wage issue pits franchisees against cities

By
From page C1 | June 29, 2014 |

Joyce M. Rosenberg

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.

Franchise owners have advantages the independent owners don’t have — for example, menus and advertising supplied by the franchisor, Seattle Mayor Ed Murray said in a statement responding to the lawsuit filed June 11, a week after he signed the minimum wage bill into law. His office did not respond to requests for comment for this story.

Franchisees counter that they have to pay for the privilege of owning a franchise, and for the services franchisors provide. Chuck Stempler, a plaintiff in the IFA lawsuit, says he pays $400,000 a year in fees to AlphaGraphics for the six printing and marketing businesses he operates in Washington and California. Seattle’s Mayor Murray says franchisees and franchisors should renegotiate those fees so business owners have more money to pay their workers.

Stempler, who has 69 employees at two Seattle franchises, says he’ll have to cut jobs to afford the higher wage. The law will increase his payroll costs between $68,000 and $100,000 a year. His competitors will find it easier to adapt because of how officials have structured the law, he says.

“They are discriminating against a class of independent businesses, legally recognized by the federal government and the state,” says Stempler.

In Chicago, restaurant franchisees are included under the proposed minimum wage law although other businesses with revenue under $50 million would be exempt. Franchisees would have to raise employees’ wages from the current minimum of $8.25 to $15 within two years.

At the restaurant chain Firehouse Subs, the Chicago proposal could lead to customers paying more and getting less service because staffs will be smaller, says Steve Szalinski, a franchisee who also helps new owners get started.

“You could see 10 to 20 percent increases in price,” Szalinski says. “Levels of service plausibly won’t be as good. It would be an enormous challenge.”

The laws could end up costing cities some franchises, says franchising consultant Charlie Magee. Several of his clients decided not to buy franchises in Seattle, and instead are looking in the suburbs or Bellingham, 90 miles north of Seattle, even Oregon, says Magee, who works for the consulting company FranNet.

Some franchisors are also wary about Seattle. The shorter phase-in period is just part of the problem, says Jerrod Sessler, CEO of HomeTask, which has six franchise brands including lawn, handyman and pet grooming services. He won’t encourage prospective buyers to seek Seattle locations.

“If you have a city that is willing to pass this sort of legislation, it erodes a trust that they’re going to make decisions to help businesses grow and prosper,” he says.

_____

Online:

IFA, www.franchise.org

 

The Associated Press

The Associated Press

LEAVE A COMMENT

Discussion | 1 comment

The Daily Republic does not necessarily condone the comments here, nor does it review every post. Read our full policy

  • Mr. PracticalJune 29, 2014 - 11:23 am

    The franchisee and franchisors should renegotiate their fees? The mayor of Seattle actually said that? How can someone like that be tasked with leading a city the size of Seattle?

    Reply | Report abusive comment
.

Solano News

Get your blues on – for a musical cause

By Amy Maginnis-Honey | From Page: B1

 
Area churches bring joy, toys to children

By Susan Winlow | From Page: A1, 1 Comment | Gallery

Rear ends, reunions define 2014 in music

By Nick DeCicco | From Page: B1

 
Santa spreads Christmas cheer at Bridge to Life

By Susan Winlow | From Page: A1, 1 Comment | Gallery

Word of Mouth ready to ring in 2015 at Dimitri’s

By Amy Maginnis-Honey | From Page: B1

 
Solano’s 2014 art scene: A year in review

By Amy Maginnis-Honey | From Page: B1

 
‘America’s Got Talent’ auditions Feb. 7 in Bay Area

By Amy Maginnis-Honey | From Page: B2

 
Suisun City police log: Dec. 24, 2014

By Susan Hiland | From Page: A12

Fairfield police log: Dec. 24, 2014

By Susan Hiland | From Page: A12

 
Weather for Friday, Dec. 26, 2014

By Daily Republic staff | From Page: B12

.

US / World

Mother uses grief to help murder victims’ families

By The Associated Press | From Page: A1

 
San Francisco creates court only for veterans

By The Associated Press | From Page: A1

California plane crash victims were father and son

By The Associated Press | From Page: A3

 
Man shot with stun gun dies at border crossing

By The Associated Press | From Page: A3, 1 Comment

California officials issue caramel apple warning

By The Associated Press | From Page: A3

 
Christmas brings California cooler weather, gusty winds

By The Associated Press | From Page: A3

Audit highlights state employee wrongdoing

By The Associated Press | From Page: A3

 
US traveler released from East Timor jail

By The Associated Press | From Page: A4

Obama personal chef to hang up apron after 6 years

By The Associated Press | From Page: A4

 
More protests sparked after shooting near Ferguson

By The Associated Press | From Page: A4, 11 Comments

Nevada goats help eat, recycle Christmas trees

By The Associated Press | From Page: A5

 
Hundreds of theaters begin screening ‘The Interview’

By The Associated Press | From Page: A5

Streaming release of ‘Interview’ test for industry

By The Associated Press | From Page: A5

 
Monkey gives first aid to electrocuted friend

By The Associated Press | From Page: A7

Militants attack AU Somalia base, at least 5 dead

By The Associated Press | From Page: A7

 
Saudi women drivers referred to terrorism court

By The Associated Press | From Page: A10, 1 Comment | Gallery

Police and fire officials save California family’s Christmas

By The Associated Press | From Page: A12

 
.

Living

Today in History: Dec. 26, 2014

By The Associated Press | From Page: A2

 
Community calendar: Dec. 26, 2014

By Glen Faison | From Page: A2

Horoscopes: Dec. 26, 2014

By Holiday Mathis | From Page: A9

 
Sister’s angry outbursts may be a medical issue

By Kathy Mitchell and Marcy Sugar | From Page: A9

.

Entertainment

Week in Preview Dec. 26, 2014 – Jan. 1, 2015

By Susan Winlow | From Page: B1

 
‘Frozen’ is named top entertainer of the year by AP

By The Associated Press | From Page: B2

 
Entertainment calendar Dec. 26, 2014

By Susan Hiland | From Page: B4

Warsaw’s lost architecture portrayed in miniature

By The Associated Press | From Page: B5

 
Review: ‘Unbroken’ is beautiful, but impersonal

By The Associated Press | From Page: B6

Angelina Jolie’s latest incarnation: filmmaker

By Maureen Fissolo | From Page: B6

 
TVGrid

By Daily Republic Syndicated Content | From Page: B11

.

Sports

James hears plenty of cheers in return to Miami

By The Associated Press | From Page: B7 | Gallery

 
2014 sports quirks: In year of odd bounces, reality bites at World Cup

By The Associated Press | From Page: B7 | Gallery

 
Colin Kaepernick weighing his offseason approach

By The Associated Press | From Page: B7

Arians reportedly to go back to Lindley as starter

By The Associated Press | From Page: B8

 
Former TE Ben Utecht delivers musical message

By The Associated Press | From Page: B8 | Gallery

K-State’s Snyder still penning old-school notes

By The Associated Press | From Page: B8 | Gallery

 
Fresno State pushed around in in Hawaii Bowl

By The Associated Press | From Page: B8

 
This date in sports history for Friday, Dec. 26, 2014

By The Associated Press | From Page: B9

Eagles have quarterback questions going into 2015

By The Associated Press | From Page: B10

 
New OT rule in minor-league hockey generating buzz

By The Associated Press | From Page: B10

To reduce elitism, British horse racing educating spectators

By The Associated Press | From Page: B10

 
Bad news for Balotelli as Liverpool alters system

By The Associated Press | From Page: B10

LeBron James, Steph Curry lead NBA All-Star voting

By The Associated Press | From Page: B10

 
Former NBA All-Star Marbury fan favorite in China

By The Associated Press | From Page: B10 | Gallery

Signups for Friday, Dec. 26, 2014

By Paul Farmer | From Page: B10

 
D-I’s youngest coach also has inexperienced team

By The Associated Press | From Page: B10

No. 17 Wisconsin hopes program back on steady ground

By The Associated Press | From Page: B10

 
Rookie Martin makes quick impression in Dallas

By The Associated Press | From Page: B10

.

Business

 
Bad Santa? 5 tips to tackle your holiday gift returns

By The Associated Press | From Page: B11

.

Obituaries

Thomas A. O’Neill

By Nancy Green | From Page: A4

 
.

Comics

Sally Forth

By Daily Republic Syndicated Content | From Page: A8

 
Pickles

By Daily Republic Syndicated Content | From Page: A8

Blondie

By Daily Republic Syndicated Content | From Page: A8

 
Baldo

By Daily Republic Syndicated Content | From Page: A8

Baby Blues

By Daily Republic Syndicated Content | From Page: A8

 
For Better or Worse

By Daily Republic Syndicated Content | From Page: A8

Beetle Bailey

By Daily Republic Syndicated Content | From Page: A8

 
Dilbert

By Daily Republic Syndicated Content | From Page: A8

Rose is Rose

By Daily Republic Syndicated Content | From Page: A8

 
B.C.

By Daily Republic Syndicated Content | From Page: A8

Garfield

By Daily Republic Syndicated Content | From Page: A8

 
Get Fuzzy

By Daily Republic Syndicated Content | From Page: A8

Peanuts

By Daily Republic Syndicated Content | From Page: A8

 
Wizard of Id

By Daily Republic Syndicated Content | From Page: A8

Frank and Ernest

By Daily Republic Syndicated Content | From Page: A8

 
Zits

By Daily Republic Syndicated Content | From Page: A8

Word Sleuth

By Daily Republic Syndicated Content | From Page: A9

 
Bridge

By Daily Republic Syndicated Content | From Page: A9

Cryptoquote

By Daily Republic Syndicated Content | From Page: A9

 
Sudoku

By Daily Republic Syndicated Content | From Page: A9

Crossword

By Daily Republic Syndicated Content | From Page: A9