FOR IMMEDIATE RELEASE
FRANCHISE BRANDS AND OWNERS ASK CALIFORNIA LEGISLATURE TO AMEND AB-5
160 Franchise Brands Sign Letter and Dozens of Franchise Owners Today Met with California Lawmakers to ask for AB-5 Exemption
(Sacramento, Calif., August 27, 2019) – 160 franchise brands and more than 50 California franchise owners today requested an exemption for established franchise businesses from Assembly Bill 5, or AB-5.
Through its codification and wide-ranging application of the so-called ABC Test, AB-5 would effectively turn franchising – where an independent owner licenses a brand name and an operating system from an established brand – into a corporate model, where the independent owners and their employees are effectively absorbed into a single company.
In a letter to legislators, the brands state, “IFA members are gravely concerned that, if enacted as currently drafted, AB-5 could mean the death of the franchise model in California, with devastating economic consequences,” based on their belief that “the ‘ABC test’ for employee status which would be adopted under AB-5 fails to recognize the unique nature of the franchise model.”
Letter signatories included international franchise brands like McDonald’s, Marriott, and 7-11, as well as brands and associations headquartered in California like the California Hotel and Lodging Association, The UPS Store, and Deli Delicious.
“While the intent of AB-5 to hold companies improperly classifying employees as independent contractors is reasonable, if not amended, the bill would effectively eradicate the longstanding viability of the franchise business model in California, from hotels to gyms to home health care,” said Matt Haller, Senior Vice President for Government Relations and Public Affairs at the International Franchise Association.
Implementation of AB-5 without consideration of the franchise model threatens these businesses and the jobs they create in California. To protect their small businesses and employees in California, the owners of local franchises such as Fast Signs, Mr. Rooter, Home Helpers, Express Employment and others today visited the state Capitol to meet with legislators and ask them to consider a common-sense exemption from the "ABC test" for franchise businesses.
California’s nearly 76,000 franchise businesses employ nearly 729,000 people and create nearly $70 billion in economic output. A State Senate vote on AB-5 is expected in early September.
Please click here to view the brands' letter.
About the International Franchise Association
Celebrating 58 years of excellence, education and advocacy, the International Franchise Association is the world's oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations and educational programs to protect, enhance and promote franchising and the more than 733,000 franchise establishments that support nearly 7.6 million direct jobs, $674.3 billion of economic output for the U.S. economy and 2.5 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees and companies that support the industry in marketing, law, technology and business development.