Franchise small business owners, franchise brands, associations and business groups, national media outlets, and economic experts agree: AB 5 is bad news for California.

Over 160 American franchise companies - from household names to emerging businesses - as well as the California Hotel & Lodging Association, the California Restaurant Association, the Hotel Association of Los Angeles, the Long Beach Hospitality Alliance, the National Restaurant Association, and the International Franchise Association sent a coalition letter to the California Legislature, urging an amendment to AB 5 which would protect franchise businesses in the Golden State.

“Saunda Kitchen owns a Mr. Rooter plumbing business in Sonoma County that has 30 employees, for whom she pays payroll taxes and provides the various mandated benefits. But Ms. Kitchen said she believed that she herself would have to become an employee of Mr. Rooter under the new law, which could cause the parent company to pull out of the state.

“I wouldn’t have access to new technology, training, help with marketing,” said Ms. Kitchen, who planned to talk with Mr. Rooter officials on Thursday about how to proceed.”

- California’s Contractor Law Stirs Confusion Beyond The Gig Economy, The New York Times

“If you are an entrepreneur in the state of California, you are no doubt familiar with Assembly Bill 5, the proposed bill that seeks to protect workers in the gig economy. In fact, you may even benefit from this bill if you are a driver for Uber, a handyman providing services on TaskRabbit or a caregiver on Care.com. But if, like us, you are part of a franchise business, your livelihood is in danger.

This is because Assemblywoman Lorena Gonzalez‘ AB 5 is written so broadly that it creates unintended consequences for thousands of small businesses like ours and over 700,000 franchise jobs here in California.”

- Bill Targeting ‘Gig Economy’ Will be ‘Death Knell’ for 80,000 California Franchise Businesses, Times of San Diego

“Saunda Kitchen has owned Mr. Rooter Plumbing of Sonoma County for 24 years and has 30 full-time workers, all employees who receive W-2 tax forms, she said. AB5’s language about control means that she’d become an employee since Mr. Rooter dictates things such as the logo, uniforms, background checks and other operational details.

She thinks there’s “a significant chance Mr. Rooter would pull out” and cease doing business in California. If she were to start her own plumbing company, she’d be building a business from the ground up, losing the brand equity and customer base that took years to build, she said.”

- Some sectors warn that AB5 could hurt workers, raise prices, San Francisco Chronicle

“This isn’t just wrong. It’s insulting to California’s tens of thousands of franchise owners who are suddenly facing a demotion. If the Legislature doesn’t amend its bill, California franchises from hotels to gyms to restaurants are looking at massive changes to their business model — and not for the better.

These changes are completely unnecessary. The franchise system works just fine for the 77,000-plus franchise businesses in California. Over three-quarters of a million workers depend on franchising for jobs, and we cumulatively account for nearly $70 billion in statewide economic activity, as of 2018.”

- Ali Nekumanesh, Deli Delicious Franchising, The Fresno Bee

“A final word of caution – it is not only Golden State employers that should be concerned. Efforts around the country to adopt variations of the ABC test are already well underway. In New Jersey, efforts to adopt an AB 5 test very similar to California’s stalled in the state’s lame duck legislative session last fall. Legislation has already been introduced by the leader of the New Jersey state senate to revisit the issue.  In neighboring New York, Governor Cuomo’s recent executive budget proposal for the 2021 fiscal year included proposed legislation to create the Digital Marketplace Worker Classification Task Force, which would be charged with making recommendations to the Legislature on how New York might regulate independent contractors in the gig economy in a manner akin to California.”

- Michael Lotito and James Paretti, The Daily Journal