1 minute read
Policy
by Elizabeth Denham
The Franchise Woman is excited to Introduce our new “Policy and Pride” column. We plan to report on policy and legislation that impacts the franchise industry and we’ll let you know what’s happening at the International Franchise Association (IFA). We are also thrilled that the IFA has launched a Pride Council. We will cover what they are working on to advocate for diversity and inclusion throughout the industry. Stay tuned, and if there are topics you would like to see represented, please reach out to info@thefranchisewoman.com.
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The franchise industry in California is holding its collective breath as we enter 2020 with the implementation of the new AB-5 law regarding misclassification of workers. Under this legislation, franchisors must be able to pass all three elements of the standard employment ABC test in order to classify workers are franchisees. According to Stephen Worley, Senior Director of Communications of the IFA, passing the “A” portion of the test is tricky for franchisors.
Part A states:
...The worker is free from the control and direction of the hiring entity in connection with the performance of the work, both under the contract for the performance of the work and in fact...
“There is no one who can say they are 100 percent sure they know what will happen,” Worley said. “All we can agree on is that no one knows, but none of it is good for franchising.”
The Franchise Woman 38 This law sets franchising up for complicated situations where franchisees could be classified as employees of franchisors.
“We want to be clear that we are not trying to criticize this bill. We support proper classification of employees,” Worley explained. “We are just looking for a franchise exemption.” Long-term impact of this bill could include increased financial burdens on franchisors in terms of Worker’s Comp, liability and insurance costs, reduced expansion by franchises in the state of California and decreased ability of franchisors to offer support to franchisees. The IFA is actively involved in trying to obtain an exemption as this law goes into effect January 1, 2020. Stay tuned for updates.
