As conservative intellectual Richard Weaver noted in his famous book, Ideas Have Consequences, good intentions often lead to unintended consequences. This has been the case with the proposal and passage of Assembly Bill 5, sponsored by Democratic Assemblywoman Lorena Gonzalez.
The bill initially sought to protect workers in the gig economy operating under companies such as Uber or TaskRabbit. However, it will create enormous disruptions for Californians working in franchise industries. The issue is rooted in the broadness of the bill which will have adverse effects on small businesses and over 700,000 franchise jobs in California.
AB 5 includes sections that require employers to prove that a worker “perform work that is outside the usual course of the hiring entity’s business.” Nonetheless, this is troubling since the very basis of franchising is licensing trademarks to create a replica of a brands business model.
The bill will slow down the hiring process, stop small businesses from expanding, and limit the use of business models that have proven to be profitable. AB will also demote franchise owners to franchisor employees, who would cost these owners years of hard work and equity.
Business owners hope that exemptions are taken into consideration since the livelihood of many local economies heavily depend on the jobs that franchises create—the jobs that AB 5 targets and may eliminate en masse.
