Kaufman & Forman, P.C.
Call to arrange a consultation
678-957-7769 | 770-390-9200
Contact Us
practice areas

Study explores whether minimum wage hikes adversely affect franchises

The last few years have seen major changes in the minimum wage laws of cities and states across the nation. Indeed, 14 states -- through both legislation and ballot measures -- have introduced substantial minimum wage increases since 2014.

Some of these new laws draw a distinction between large employers and small employers, with the former having to pay workers a higher minimum wage owing to their perceived greater resources and larger profits. For example, the new minimum wage law enacted in the city of Seattle calls for all large corporations -- including franchises -- to pay workers a minimum wage of $15 per hour on an accelerated schedule.

The justification among many lawmakers for including relatively small franchises responsible for a higher minimum wage is that unlike their non-franchised counterparts, they have a distinct business advantage owing to their access to a sizeable corporate network.

Interestingly, a recently completed study by an adjunct professor at Carnegie Mellon University set out to examine whether this assumption was accurate.

As part of the study, the professor surveyed both non-franchised and franchised business owners in 24 of largest U.S. markets about a potential $15 per hour minimum wage, focusing on the eight industries that tend to employ more minimum wage employees (hotels, restaurants, etc.).

The survey revealed that it’s the franchised business owners who would actually struggle more with a minimum wage increase:

  • 66 percent of franchised business owners indicated they would have to consider cutting staff as opposed to 50 percent of non-franchised business owners
  • Almost 50 percent of franchised business owners indicated they would have to consider automated staffing alternatives as opposed to 33 percent of non-franchised business owners

As to the reasons behind these findings, the professor theorized that it could have to do with the fact that franchised business owners typically employ more entry-level employees.

Whatever the reasons, the findings are certainly fascinating. Indeed, it will be interesting to see the degree to which studies like these enter into conversations to increase the minimum wage here in Atlanta or across Georgia.

If you are an entrepreneurs looking to open a franchise , it may be beneficial to first consider sitting down with an experienced legal professional to learn more about the law and your options.  

No Comments

Leave a comment
Comment Information

Contact Kaufman & Forman, P.C. Now

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

get Legal Help Now

Kaufman & Forman, P.C.
8215 Roswell Road
Building 800
Atlanta, GA 30350

Toll Free: 800-461-5864
Phone: 678-957-7769
Fax: 770-395-6720
Atlanta Law Office Map

Review Us

Robert Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the May issue of The American Lawyer & Corporate Counsel magazine.Alex Kaufman has been selected as a 2013 Top Rated Lawyer in ‘Commercial Litigation’ as will be published in the December issue of The American Lawyer & Corporate Counsel magazine.

*AV Preeminent and BV Distinguished are certification marks of Reed Elsevier Properties Inc., used in accordance with the Martindale-Hubbell certification procedures, standards and policies. Martindale-Hubbell is the facilitator of a peer review rating process. Ratings reflect the confidential opinions of members of the bar and the judiciary. Martindale-Hubbell ratings fall into two categories: legal ability and general ethical standards.