IFA: St. Paul City Council Recognizes Franchises as Small Businesses

May 31, 2019


Jenna Weisbord, 310-995-0839

Following IFA Involvement, Anti-Franchise Language Removed from Minimum Wage Hike

(WASHINGTON, NOV. 14) – The International Franchise Association (IFA) today thanked the St. Paul, Minn. city council for its removal of an anti-franchise provision as part of its approved ordinance increasing the city’s minimum wage. 

Initial drafts of the ordinance had failed to recognize the independently-owned and operated nature of franchise businesses and grouped them together with large corporations on an accelerated wage increase timetable.

“We are pleased that the St. Paul city council recognizes that franchise businesses are independently-owned small businesses and not units of a larger national brand, even while we don’t support a $15 an hour minimum wage,” said Matt Haller, IFA’s Senior Vice President of Government Relations and Public Affairs. “This recognition, which was achieved through engagement of the St. Paul franchise business community, is an important acknowledgment of the role that locally-owned and operated franchise small businesses play in economic development and community life. Franchise businesses are small businesses, and it’s important that they are treated as such.”  

The franchise business model relies on both an existing brand and a local owner. The parent brand company grants a local owner the right to use its trademark, business systems, and processes to produce and market a good or service. The business owner usually pays a one-time franchise fee and a percentage of sales revenue as royalty but operates his or her own small business under a national name.

IFA has worked with the St. Paul city council since the ordinance’s introduction to emphasize the need for fair treatment of franchise businesses. Despite the introduced language initially discriminating against independently-owned franchise businesses, the IFA in conjunction with local franchise owners were able to convince the city council to place all franchised and non-franchised small businesses on the same timetable, ensuring parity and fairness for St. Paul small businesses and their employees.

Under the approved ordinance, St. Paul “big businesses” will implement an incremental minimum wage increase until reaching $15 an hour in 2023. “Small businesses” will incrementally implement wage increases until reaching $15 an hour until 2025. The ordinance determines these classifications by the number of employees; for franchise businesses, employee totals are counted by employees per franchise business owner instead of employees per national brand.

St. Paul follows other jurisdictions such as Chicago and Baltimore who have rejected discriminatory wage hikes for franchise businesses.

About the International Franchise Association

Celebrating 56 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 733,000 franchise establishments that support nearly 7.6 million direct jobs, $674.3 billion of economic output for the U.S. economy and 2.5 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.