Earlier this year, a federal judge ruled against small business owners seeking to temporarily halt part of Seattle’s $15 minimum wage law. As Shift reported, the International Franchise Association (IFA), along with five local franchisees, sought a preliminary injunction to suspend the portion of the $15 minimum wage law that classifies franchises—no matter the size—as big businesses, which places them at a financial disadvantage against other small businesses by putting them on a “faster track toward paying workers $15 an hour.”
Today, a federal appeals court panel will hear arguments from lawyers for local small business franchise owners and the IFA. They will argue that the $15 minimum wage law is discriminatory, with certain small businesses being classified as “large businesses” simply due to franchise affiliations. Most local franchise businesses have a modest number of employees, yet are placed in the same category as businesses with more than 500 employees due to clear discrimination at the hands of the law’s authors in order to meet the political objectives of the labor leaders who provide council members with campaign cash.
There is quite a lot of evidence backing the IFA’s discrimination claims. As Shift reported, Seattle businessman David Meinert, a member of Mayor Ed Murray’s Income Inequality Advisory Committee (IIAC) which was charged with developing the $15 minimum wage law, said the following in a sworn statement:
“During the IIAC process, there was discussion about whether the Mayor’s minimum wage bill should treat small franchise businesses as large employers. I had several meetings with David Rolf [President of SEIU Healthcare 775NW and co-chair of IIAC] in which he told me that the purpose behind treating small franchise businesses as large employers under the minimum wage law was “to break the franchise model” and “enable labor unions to organize employees of such businesses.”
Additionally, Seattle billionaire Nick Hanauer, who was also part of Murray’s (IIAC), emailed the following Seattle City Councilmember Tim Burgess:
“I am well aware that the compromise we fashioned classified most franchise owners as Large. This was our intent and I believe that there are very good reasons for this… In the piece that we wrote for the Stranger, Eric Liu and I asserted that we need to rethink the very nature of the capitalism that we want. The truth is that franchises like subway and McDonalds really are not very good for our local economy. They are economically extractive, civically corrosive and culturally dilutive. Can you think of anytime people got excited about the addition of one of these franchises to their neighborhood??? … To be clear, the net amount of food people in Seattle will consume will not change if we have fewer franchises. What will change is what they consume and from whom. A city dominated by independent, locally owned, unique sandwich and hamburger restaurants will be economically, civically and culturally rich than one dominated by extractive national chains. You can’t get more stuff at the Pike Place market than at a Walmart, but nobody ever flew around the world to go visit a Walmart.”
As Shift previously stated, the big take-away from the yet unfolding debacle that is Seattle’s $15 minimum wage law is rather clear. As with all “I’m looking out for the little guy” policies liberal Democrats love to endorse, it’s never really about the little guy. Rather, it’s about a very specific special-interest agenda that works to give an inordinate amount of power to labor unions which, in turn, give lots of money to ensure Democrats keep getting elected. Of course, it’s all at the expense of the little guy.
Perhaps Hanauer should take a look at that kind of “extractive” agenda.
There is quite a lot of evidence backing the IFA’s discrimination claims.
Good luck with any argument which claims that McDonald’s is not a “large business.”
Clay Fitzgerald says
You obviously don’t have any comprehension of how the franchise business model works. McDonalds Corp. doesn’t really operate the outlets. The individual McDonalds restaurants are run by business owners who pay fees to McDonalds to support the business operations for numerous things such as advertising, supplies, uniform standards for the franchises among other thing. The wages/salaries paid to McDonalds’ workers are paid by the franchisee, the individual business owner. Since many of the prices are set, if the cost of labor goes up several things will happen, by themselves or collectively, profit margins go down, employees get reduced hours or laid off, more automation (that’s good for entry level jobs, isn’t it?), prices increase or eventually the business closes it’s doors. Do you have any idea of how much a fast food franchise like a McDonalds’ cost? To open a single restaurant, the company requires that potential franchisees have liquid assets of at least $750,000. Startup costs, which include construction and equipment expenses, average between $955,708 and $2.3 million, much of which is borrowed which is another cost for the franchisee. You, Hanauer, the Seattle Clown council and SEIU just don’t get it.
I’m well-versed on the model, thank you very much. The legal reality is the franchise is part of the overall large company, as even this post admits in the very first line. Legal reality aside, even on image alone, claiming that McDonald’s isn’t a “large business” won’t pass the giggle test with most voters. (But please, feel free to continue amusing us with your efforts.)
You, Hanauer, the Seattle Clown council and SEIU just don’t get it.
Or maybe we get it better than you do. Here’s a hint, from the 15 December 2003 edition of The Wall Street Journal, in the article, “Franchise Fever: So, you want to own a franchise? Join the crowd; Here’s how to make sure you’re one of the entrepreneurs left standing” (Sorry for no link; article is behind a paywall):
“With so much of the economy relying on franchising — not just fast foods and hotels but funeral homes and real estate — for the American consumer choice is declining,” says Prof. Grunhagen. “That is a cost that may not be measurable, but clearly it’s important.”
Expensive to join, drains money from the local economy, reduces choice for consumers: that’s quite the awesome business model you’ve chosen to defend. Add in the reliance on poverty wages for our many local workers — but big money for the few high-ranking corporate officers, somewhere far, far away — and you’ve got yourself a sure political winner there, no doubt!
Good luck with that.
The only thing you’re well-versed on is your billionaire commissars talking points. As usual, your vast knowledge of franchising is a BB in a boxcar. Having not spent my entire working life taking a gray bus in my gray uniform down to the Ministry of Truth, I’ve actually owned a franchise. I have years of tax records stating Biff’s Enterprises, Inc. DBA (this is the tricky part for all you communists, DBA stands for “doing business as”, since you don’t have the slightest clue what “doing business” means) Spacely Sprockets. My employees W-2s and 1099s all said the same thing. Why didn’t I get a 1099 or my employees a W-2/1099 from Spacely Sprockets? Because I have no legal connection to them outside of a licensing agreement. That’s what the “DBA” (“Doing business as”, in case you didn’t catch it the first time around) handles. It means you can have entirely separate business entities licensed to do business under the same name. That’s what franchising is at the core, a licensing agreement. I get to use the corporate name, advertising, brand loyalty, logos, etc. in return for a percentage of my sales. Why do leftists have so much of a problem with this? Really, post the W-2s showing “McDonald’s Corporation” as the employer of any maximum idiocy employee you’re “fighting for”.
“In the piece that we wrote for the Stranger, Eric Liu and I asserted
that we need to rethink the very nature of the capitalism that we want”
Who elected this piece of crap to decide “the very nature of the capitalism that we want”? Does he hold a government policy making position? Or maybe he thinks he can just throw millions at an election to have his “special” brand of communism enacted?
If you want to overpay for a meal at Valhalla Cafe, where everybody already makes $15+/hr and the food tastes much, much better, knock yourself out. Why do you think you get to decide where I eat?
Exactly, why isn’t there a high pitched wailing from the pasty Seattle vegans about billionaires writing policy? Big money is bad, yes?
Our City Council wrote the policy, and passed it unanimously. Mr. Hanauer is free to advocate for or against it if he wishes. Since it’s a very popular policy, his words have little effect.
Anyway, our federal Supreme Court ruled that money spent on advocacy is free speech; go take it up with them.
Having not spent my entire working life taking a gray bus in my gray uniform down to the Ministry of Truth,
We all know how much you love a man in a uniform, but my career has actually been spent in the private sector. The difference is that when I worked for a huge corporation, it paid me. (I know, I know — we wacky Seattle commie-libs just have no idea how business should work!)
That’s what franchising is at the core, a licensing agreement. I get to use the corporate name, advertising, brand loyalty, logos, etc. in return for a percentage of my sales.
We both know it’s a binding contract: when the big corporation cracked their whip, you jumped. I’m sure you spent many fine hours ensuring their logo was displayed in full compliance with the twenty-page document they sent you, dictating all of your actions on such incredibly important, value-adding business matters.
But, thanks for confirming Hanauer’s comment about how franchises are “economically extractive”.
Why do you think you get to decide where I eat?
Go back and read the quote from The Wall Street Journal. It’s you franchisees who reduced consumer choice in the communities whose wealth you shipped to your corporate overlords.
Really, post the W-2s showing “McDonald’s Corporation” as the employer of any maximum idiocy employee you’re “fighting for”.
So, if a W-2 form shows the employee as working for a military contractor, he’s in the private sector, and his job in no way depends upon government funding, correct?
Yes, please do tell us all about your deep respect for democracy in Seattle. Be especially sure to include more statements demonstrating your admiration for our elected officials!
… this piece of crap…
Always keeping it classy!
“We both know it’s a binding contract”
All contracts are binding agreements, genius. That’s why they’re called contracts and not handshakes.
“So, if a W-2 form shows the employee as working for a military
contractor, he’s in the private sector, and his job in no way depends
upon government money, correct?”
If an IRS form W-2 shows an employee as working for a military contractor, he’s definitely in the private sector, because said military contractor is the one who pays him, withholds taxes, pays half his social security and so on. It make zero difference who pays contractor.There is no line on a W-2 stating how the employer funds having an employee. Again, show me a document, any document that says McDonald’s Corporation is legal employer of any maximum idiocy employee in Seattle.
“Who elected…” “…this piece of crap…” C’mon, comrade context, you can do better than that. At least string your copy and paste jobs into coherent sentences.
“Be especially sure to include more statements demonstrating your admiration for our elected officials!”
When was it your billionaire commissar became one of your elected officials? I missed that election. Oh, yeah. It never happened. He’s just a rich leftist who thinks he can buy public policy.
All contracts are binding agreements, genius. That’s why they’re called contracts and not handshakes.
Yes, but your attempt to down-play your utter subservience to your faceless and faraway corporate masters was the reason you used the gentler term. (As usual, you didn’t fool anyone.) When operating per your licensing agreement, you did exactly what your corporate overlords dictated to you, just like any other small mindless cog in a huge machine would; the only difference is that you paid them, not the other way around.
It make zero difference who pays contractor.
McDonald’s is not a large business because a military contractor does not depend upon the government! That’s an argument which will win many a policy debate, no doubt. Please make it loudly and often.
He’s just a rich leftist who thinks he can buy public policy.
And where is the evidence he succeeded? That he wrote an e-mail to an elected official? Yeah, that’s something only the wealthy and powerful ever do, for sure.
At least string your copy and paste jobs into coherent sentences.
I’m doing the best I can with the miserable material I’m provided. (You really were a franchisee!)
“your attempt to down-play your utter subservience to your faceless and
faraway corporate masters was the reason you used the gentler term”
Your over-the-top hyperbole based on absolutely no practical experience, but relying on your billionaire commissars talking points is laughable. From someone who takes the gray bus to get to the Ministry of Truth, a 30 minute drive may seem far away, but to a modern American, it’s nothing and I can assure you the franchisor definitely had a face. Not particularly handsome, but not ugly, either.
“McDonald’s is not a large business because a military contractor does not depend upon the government!”
That’s some twisted logic, even for you, Comrade. It makes a pretzel look positively linear. Cite where I made either of those statements. You can’t. I challenged you to find a maximum idiocy employee in Seattle with a W-2 that states McDonald’s Corporation as their legal employer, per your beloved IRS. How’s that search going? Not so good, apparently, because you then came back with an unbelievably stupid non-sequitur about employees of military contractors being dependent on the government. Since you know full well local franchise employees aren’t McDonald’s Corporation employees, your attempt at deflection was a pathetic failure.
” And where is the evidence he succeeded? That he wrote an e-mail to an elected official?”
“I am well aware that the compromise we fashioned classified most franchise owners as Large. This was our intent and
I believe that there are very good reasons for this… In the piece that
we wrote for the Stranger, Eric Liu and I asserted that we need to
rethink the very nature of the capitalism that we want”
Yep. An e-mail where your unelected blowhard billionaire commissar openly bragged about “WE” classified small franchises as large businesses. If he would be honest he’d say: “I don’t like franchises and since I can’t beat them economically, I’ll use the hammer of government mandate to drive them out of business” Don’t expect honesty from a leftist, especially not from this clown.
Since you know full well local franchise employees aren’t McDonald’s Corporation employees, your attempt at deflection was a pathetic failure.
And yet, the court rejected your argument, which somehow means your attempt was even worse than “a pathetic failure”. Um, congratulations. (Is this an example of the innovation you franchisees bring to our communities?)
Nobody cares about your W-2 form dodge — although we do understand your absolute, unquestioning belief in whatever big government tells you. You’re claiming an employee wearing a McDonald’s uniform, flipping McDonald’s burgers in a building with the McDonald’s logo plastered across it, is not actually working for McDonald’s. (That argument has already failed you in court, but you haven’t seemed to notice. Too bad for you.)
Also, your endless whining about how an unelected citizen tries to alter policy — what the heck does Seattle think it is anyway, some kind of democracy?!?!? — might carry weight if you’d accept the results of our actual elections. But you loudly reject everything from I-594 to Council Member Sawant, all the while continuing to reside in Washington and work in Seattle.
“I don’t like
franchisesplantations and since I can’t beat them economically, I’ll use the hammer of government mandate to drive them out of business”
There, fixed that for you. Good luck getting the 13th Amendment eliminated, right after you convince anyone that Big Macs aren’t actually flipped by employees of McDonald’s.