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IFA Issues Statement in Response to Ninth Circuit Court of Appeals Ruling In Seattle

WASHINGTON, D.C., Sept. 25, 2015 – The International Franchise Association, the world’s largest organization representing franchise owners, expressed disappointment following the decision by the Ninth Circuit Court of Appeals today to uphold the city of Seattle’s 2014 minimum wage law which purposefully discriminates against small franchised businesses.  

IFA and five Seattle franchisees sued Seattle in June 2014, seeking to block portions of the city’s new law to increase the city’s minimum wage to $15 an hour. The plaintiffs asked the court to enjoin the city from treating franchisees as large, national companies rather than the small, locally-owned businesses that they are.

“Today’s decision is clearly a disappointment as the ordinance is blatantly discriminatory and affirmatively harms Seattle hard-working franchise small business owners every day since it has gone into effect,” stated IFA’s Executive Vice President of Government Relations & Public Policy Robert Cresanti. Cresanti added that in its decision, the Ninth Circuit Court acknowledged that a different federal circuit court, the Eleventh Circuit Court of Appeals, has struck down restrictions on franchises as unconstitutional under the Commerce Clause. “The absence of controlling Supreme Court precedent, and the conflict among the decisions of the federal circuit courts, suggests that Supreme Court review of the Ninth Circuit’s decision may be appropriate.”

Seattle’s new law, which went into effect April 1, 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 starting in April 2015. Smaller businesses will have seven years to phase in the wage increase.

The IFA lawsuit argued that the Seattle ordinance defied years of legal precedent clearly defining a franchisee as an independent local business owner who operates separately from its franchisor, which provides brand and marketing materials. IFA also contended that this categorization violated the Equal Protection Clause of the U.S. Constitution, as well as Washington State’s Constitution.

Cresanti said IFA is still reviewing the opinion to evaluate the next steps in the appeal. To view the full opinion, click here. 

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About the International Franchise Association

Celebrating 55 years of excellence, education and advocacy, the International Franchise Association is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 780,000 franchise establishments that support nearly 8.9 million direct jobs, $890 billion of economic output for the U.S. economy and 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.

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