The one-two punch of state and federal employment standards activity poses an existential threat to franchising; many commentators, including this one, have acknowledged that fact. But why? Did the California legislature or the Obama Department of Labor intend to deliver a knock-out punch to a very popular business structure that creates tens of thousands of

Hot on the heels of disappointing AB-5 news from California, a federal district court in Manhattan delivered a stinging rebuke to the Department of Labor (“DOL”), invalidating the control-based joint employment rule issued by the Department only 6 months ago.

The DOL Rule adopted a control-based test of joint employment for purposes of federal employment

As if COVID, wildfires, and heat weren’t enough, California franchisors and franchisees suffered another gut punch when the legislature rejected a proposed franchise exemption to AB-5.

When AB-5 was enacted in 2019, to the horror of the franchise industry, it appeared to create a presumption that the franchise business model created an employment relationship between