What if Uber Drivers Were Neither 1099 Employees or W-2 Employees, But Instead Were Franchise Owners

According to Federal Law, under the FTC Franchise Rule, there are 3 major elements that define a franchiser and franchisee relationship.

(1) Trademark:

If the franchisee has the right to use a trademark, service mark, trade name etc.

(2) Significant Control or Assistance:

This means the franchisor has “significant” control over the franchisees operations or provides significant guidance over the following aspects:

  • approval of the site
  • requirements for site design or appearance
  • designated hours of operation
  • specified production techniques
  • required accounting practices
  • required participation in promotional campaigns
  • training programs
  • providing an operations manual

(3) Required Payment:

If the franchisee is required to pay the franchisor a nominal dollar amount either before or after opening for business via franchisee fees, training fees, payments for goods or services or a royalty.

If all 3 elements are present, then its a franchisor, franchisee relationship. So doesn’t this mean that Uber drivers are franchisees?

I’ve felt like there needs to be a middle ground between W2 and 1099 status. Maybe a franchisee is the best middle ground. I still need to do homework as to what the implications would be — what rights franchise owners have, etc.

I’m also just using Uber as an example, this question could be asked across a number of “ODMS” platforms.

— — — — — — — — — -

Okay, so I did some homework. Based on current franchise laws, a franchisee/franchisor relationship could become a pain if you faced enroachment issues in certain states, and other regulatory fees.

But I still think that the marketplace/vendor relationship is closer to a franchisee relationship than either a 1099 and W2 relationship. And perhaps there needs to be a framework for “marketplace franchisees.”

[5'9", ~170 lbs, male, New York, NY]. I blog about investing. And usually about things I’ve learned the hard way. Opinions are my own, not CoVenture’s

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