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.
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.
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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.”