Wednesday, August 19, 2020
Uber and Lyft are dead set against California's new law classifying their drivers as employees. They've gone to court and lost, and they are appealing. Meanwhile, they have come up with Plan B to handle the fundamental marketing challenge, and they will put it into effect if the judges shoot them down. They will franchise their drivers rather than use them as freelance contractors. A franchise arrangement means each driver is running his or her own business, subject to rules spelled out in the agreement. It would be no different than a fast-food store -- say, McDonald's. Franchise agreements spell out in niggling detail how to operate and deal with customers. If history is a guide, franchisees will put multiple cars on the street and build fleets over time with drivers being contractors. The law, then, will need to determine if the franchisees are in breach. Meanwhile, Uber and Lyft can go back to the business as they originally defined it.