Uber and Lyft Looking Into Franchise-Like Model for California

With recent lawsuits forcing Uber and Lyft to classify their drivers as employees as opposed to independent contractors, the two main rideshare companies are looking at other options to keep operations running in California.

One option they are considering at the moment is a franchise-like model where they would license their brands to vehicle fleet operators in California. This would allow Uber and Lyft to be an added step away from the drivers, something that would be necessary to keep them from having to pay employee-level benefits.

This is similar to what Uber already does with fleet operators in Germany and Spain. However, according to the New York Times, an Uber spokesman stated that this is just something being considered and it’s not certain if this model would truly be a viable option in California.

What a Franchise-Like Model Could Look Like for Drivers

The details of what this kind of model would look like are a bit muddy at the moment since it’s just in the consideration stage. It’s possible that the licensing of their brands to fleet vehicle operators could lead to decreased service and increased prices with having to pay a third party (the fleet operators).

However, from a driver’s perspective, is that really a bad thing? Over saturation of markets is a long-term complaint from drivers.

According to respondents of the recent survey we took on Uber and Lyft potentially leaving California, 84% of drivers would prefer to continue driving for Uber and Lyft without benefits while having a cap on the number of drivers in the area:

This would be as opposed to becoming an employee with benefits as Assembly Bill 5 (AB5) would require Uber and Lyft to do if the companies aren’t able to appeal it or if the ballot measure known as Protect App-Based Drivers and Services Act (PABDASA) that Uber and Lyft back financially does not pass by a vote in California this November.

Will Drivers Become Part of Franchises Around California?

Uber and Lyft have until Thursday, August 20 to file an appeal against a judge’s order to classify their drivers as employees. An option Uber and Lyft has recently stated is that of closing rideshare operations in California until further notice.

It is not stated how soon a franchise-like model would be implemented or if closing operations is still a frontrunner. No matter what, if Uber and Lyft are made to designate their drivers as employees, it’s an expensive change that neither company can really afford at the moment.

As it stands, neither company has been profitable, both saw a decrease in rides throughout the pandemic, and implementing any change right now may cost them more than either can recover from.

Drivers, what do you think about a franchise-type model for drivers? Is that preferable to being an employee or true independent contractor to you?

-Paula @ RSG