1851

With ongoing pushes for minimum wage increases, franchisees across the country are trying to reconcile what substantial jumps in operating costs could mean for their businesses.Though the&nbsp;<a href="https://bluerocksearch.com/2023/12/27/heads-up-franchises-minimum-wage-hikes-are-here/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-ongoing-pushes-for-increased-minimum-wages-mean-for-the-franchise-industry-2726303" target="_blank" rel="nofollow">federal minimum wage ($7.25) has not been increased in over a decade</a>, individual states and other jurisdictions are increasing minimum wage requirements, and some states have implemented minimum wage requirements nearly three times what the federal government mandates.In early April, for example, California enacted a&nbsp;<a href="https://www.entrepreneur.com/franchises/how-californias-20-fast-food-minimum-wage-will-impact/471968?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-ongoing-pushes-for-increased-minimum-wages-mean-for-the-franchise-industry-2726303" target="_blank" rel="nofollow">$20 minimum wage for fast-food workers</a>, impacting countless employees and business owners across the state.&nbsp;This is just one example of the benefits that advocates nationwide are pushing for in state-level legislation. Service workers are consistently underpaid and, contrary to common belief, many of these employees are&nbsp;not teenagers working their first jobs. According to&nbsp;<a href="https://datausa.io/profile/soc/fast-food-and-counter-workers?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-ongoing-pushes-for-increased-minimum-wages-mean-for-the-franchise-industry-2726303" target="_blank" rel="nofollow">DataUSA</a>, the majority of fast food employees are women making an average salary of just $13,132 per year. Compared to the national average of $59,596 across all professions, this is a huge disparity, and it’s clear why these employees are seeking better compensation.Notably, small business owners consistently&nbsp;<a href="https://www.cnbc.com/2024/02/22/a-majority-of-americas-business-owners-support-minimum-wage-increase.html?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-ongoing-pushes-for-increased-minimum-wages-mean-for-the-franchise-industry-2726303" target="_blank" rel="nofollow">support these increases</a>, too. Despite concerns about labor costs, 61% of small business owners support increasing the minimum wage in their state. This is illustrative of the unique position many franchisees are in.“The average wage has definitely changed over the past couple years post-COVID, and I think it is the new norm that is here to stay,”&nbsp;<a href="https://www.linkedin.com/in/brian-s-6aa5b81b/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-ongoing-pushes-for-increased-minimum-wages-mean-for-the-franchise-industry-2726303" target="_blank" rel="nofollow">Brian Shunia</a>, co-founder and CEO of&nbsp;<a href="https://www.wingsnob.com/Franchising?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-ongoing-pushes-for-increased-minimum-wages-mean-for-the-franchise-industry-2726303" target="_blank" rel="nofollow">Wing Snob</a>, said.&nbsp;“We don't see a demand for higher wages from our employees as we pay very well within our restaurants. The ability to recruit new staff at a lower wage has become more difficult with the current costs of living so we have adjusted our operations to this new norm.”While some minimum wage laws have workarounds for “small business owners,” most franchisees do not fall into this category. Even if they own just two locations and run them like small local businesses, they are part of a larger system that is subject to standard wage regulations. This leaves local franchise owners concerned about the futures of their businesses.“As the cost of living increases in various markets, the biggest concern is the need to pass the costs on to the consumer to keep our businesses afloat,” Shunia said.Regardless, Shunia said Wing Snob is willing to pay these prices “to recruit stronger team members within [its] organization.”<figure class="media"><div data-oembed-url="https://www.youtube.com/watch?v=9UD7ckiwF2w"><div class="iframely-embed"><div class="iframely-responsive"><iframe src="//cdn.iframe.ly/api/iframe?app=1&amp;api_key=fd3b6b3731f34f55ba1fe3&amp;url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3D9UD7ckiwF2w" frameborder="0" allow="autoplay; encrypted-media" allowfullscreen=""></iframe></div></div></div></figure> Franchisees often rely on low-wage employees to conduct daily operations, and regardless of owners’ stances on fair pay, steep minimum wage increases have practical impacts on franchisees’ businesses.With these increases, franchisees are left to somehow adjust their operations to remain profitable, but in many cases, these location-specific strategies would be necessary regardless of variation in employees’ hourly rates.“Whether an employee is making $10/hour or $20/hour, our budgeting strategies remain the same based on the financial state of the specific restaurant,” Shunia said. “Wages vary heavily depending on the market. In Texas we see the average wage running about 20% lower than in the MidWest; that is mostly due to the local cost of living differences.”When the cost of labor increases, there are a few obvious solutions: decrease the size of the workforce, pass price increases along to consumers or streamline the business to cut costs in other ways.&nbsp;No single solution can entirely alleviate the friction that major wage increases cause for franchisees, and changes to operational models need to be dynamic and multi-faceted.&nbsp;In addition to innovation from franchisees, ongoing wage requirement shifts could impact the franchise industry on a larger scale. The International Franchise Association advocates against stark wage increases, noting that the impact could be “<a href="https://www.franchise.org/media-center/press-releases/small-business-owners-say-now-is-not-the-time-for-a-minimum-wage-hike?utm_source=1851franchise.com&utm_medium=article&utm_campaign=what-ongoing-pushes-for-increased-minimum-wages-mean-for-the-franchise-industry-2726303" target="_blank" rel="nofollow">counterproductive at best and devastating at worst</a>,” especially in the context of franchisees’ ongoing recovery from the pandemic and its aftershocks.As wage-related conversations continue at national and state levels, the franchise industry continues to advocate for its unique model, supporting local business owners in their continued growth without sacrificing the value of a well-known, established system.Read more on 1851 Franchise about the history and impacts of minimum wage shifts in the franchise industry:<ul><li><a href="https://1851franchise.com/mooyah/fox-business-red-robin-eliminates-bus-boys-as-restaurants-combat-minimum-wage-hikes-2705260#stories">Mooyah | Impact of Minimum Wage Hikes</a></li><li><a href="https://1851franchise.com/mooyah/new-york-times-when-amazon-raises-its-minimum-wage-local-companies-follow-suit-2715294#stories">New York Times: When Amazon Raises Its Minimum Wage, Local Companies Follow Suit</a></li><li><a href="https://1851franchise.com/what-mcdonalds-minimum-wage-hike-means-for-qsr-brands-2716159#stories">What McDonald’s Minimum-Wage Hike Means for QSR Brands</a></li><li><a href="https://1851franchise.com/these-23-states-have-minimum-wage-increases-effective-january-1-2023-2720623#stories">These 23 States Have Minimum Wage Increases Effective January 1, 2023</a></li><li><a href="https://1851franchise.com/mcdonalds-to-hike-royalty-fees-for-new-franchisees-marking-first-increase-in-30-years-2723700#stories">McDonald’s to Hike Royalty Fees for New Franchisees, Marking First Increase in 30 Years</a></li></ul>

The Effect of Minimum Wage Increases on Franchises

1851 Franchise

Though the federal minimum wage has not changed since 2009, state and local jurisdictions have made major increases, creating friction and forcing innovation in the franchise space.

What Ongoing Pushes for Increased Minimum Wages Mean for the Franchise Industry

what-ongoing-pushes-for-increased-minimum-wages-mean-for-the-franchise-industry

United Water Restoration Group

The Importance of Quick Response in the Water Restoration Business: How United Water Restoration Group Leads the Way

the-importance-of-quick-response-in-the-water-restoration-business-how-united-water-restoration-group-leads-the-way

Senior Care Authority

Senior Care Authority Celebrates Major Wins and Welcomes Four New Franchisees in Q1 2025

senior-care-authority-celebrates-major-wins-and-welcomes-four-new-franchisees-in-q1-2025

Children's Lighthouse

Why This Hotel Franchise Owners is Investing in Children’s Lighthouse 

why-this-hotel-franchise-owners-is-investing-in-childrens-lighthouse

Integrity Franchise Group

Which Franchise Ownership Model Is Right for You? Semi-absentee Ownership?

which-franchise-ownership-model-is-right-for-you

Melting Pot

Photo of 50th Anniversary Melting Pot fondue with golden chives

50 Years of Fondue and Family: Melting Pot Celebrates Its Legacy and Looks to the Future

melting-pot-franchise-50th-anniversary

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

Franchise Face-Lifts: Why Major Restaurant Brands Are Betting Big on Remodels

franchise-face-lifts-why-major-restaurant-brands-are-betting-big-on-remodels

How New Tariffs Are Causing Price Hikes and Surcharges for U.S. Businesses and Franchises - 1851

Tariffs Prompt Price Hikes, Surcharges as Businesses (and Franchises) Brace for Rising Costs 

tariffs-prompt-price-hikes-surcharges

Pizza Hut - EYM Group - Chapter 11 Bankruptcy - 77 Pizza Hut Locations Sold - 1851 Franchise

77 Pizza Hut Locations Sold After Franchisee Bankruptcy Filing

pizza-hut-franchisee-bankruptcy-eym-group

Jersey Mike's - Blackstone - Global Growth - 1851 Franchise

Jersey Mike’s Ramps Up Global Growth Following Blackstone Acquisition

jersey-mikes-blackstone-growth

Layoffs Surge to Pandemic-Era Highs, Opening Doors for Franchise Growth

layoffs-surge-to-pandemic-era-highs-opening-doors-for-franchise-growth

Paris Baguette Ranks Among Top Franchises on Entrepreneur’s Franchise 500® for 2025 - 1851 Franchise

Paris Baguette Ranks Among Top Franchises on Entrepreneur’s Franchise 500® for 2025

paris-baguette-ranks-among-top-franchises-on-entrepreneurs-franchise-500-for-2025

&pizza - Fast-Casual Pizza Chain Begins Franchising - 1851 Franchise

&pizza Embraces Franchising To Fuel Bold New Growth Strategy

andpizza-franchising-ceo-mike-burns

CFOs See Recession as Likely in ’25; Why Now Is the Time To Water the Franchise Buyer Seeds

cfos-see-recession-as-likely-in-25-why-now-is-the-time-to-water-the-franchise-buyer-seeds

Franchisee spotlight image with Randy and Sandy Craft, Children's Lighthouse logo on blue background

The Crafts’ Successful Journey from New Parents to Children’s Lighthouse Franchisees

the-crafts-successful-journey-from-new-parents-to-childrens-lighthouse-franchisees

Lindora’s New President Discusses Franchise Growth and the Future of Health and Wellness

lindoras-new-president-discusses-franchise-growth-and-the-future-of-health-and-wellness

Military Veteran and Craft Beer Enthusiast to Bring Voodoo Brewing Co. to Toledo, Ohio

military-veteran-and-craft-beer-enthusiast-to-bring-voodoo-brewing-co-to-toledo-ohio

franchisee spotlight graphic with photo of Venetya Evans and Sylvan Learning logo

IT Leader Celebrates One Year of Sylvan Learning in Simi Valley: A Passion for Education and Technology Drives Her Mission to Help Students Succeed

it-leader-celebrates-one-year-of-sylvan-learning-in-simi-valley

The Top 20 Cleaning Franchises to Invest in for 2025

top-cleaning-franchises-to-invest-in

What Ongoing Pushes for Increased Minimum Wages Mean for the Franchise Industry

MORE STORIES LIKE THIS