Uber and Lyft: Okay But What If Franchises, Though?

Illustration for article titled Uber and Lyft: Okay But What If Franchises, Though?
Photo: JOSH EDELSON/AFP (Getty Images)

California’s rideshare behemoths Uber and Lyft are still grasping for ways to get around the state’s attempts to classify their drivers as full-time employees, and the long-play at this point very much appears to be a November ballot measure. But the two companies have reportedly explored alternative workarounds as well, including the extreme measure of licensing their brands to fleet operators. You know, like a taxi service—the supposedly moribund industry these companies were supposed to supplant.


Citing sources familiar with the matter, the New York Times reported Tuesday that both companies have looked into operating more like a black car service in California, presumably to avoid paying their drivers benefits. According to the paper, the plan would see Uber and Lyft as platforms for other businesses to create their own ride-sharing fleets, a clever trick that would allow Uber and Lyft to distance themselves from the labor side of their businesses and instead operate more as a mere dispatch service.

The specifics of how such a model would work are not clear. In theory, operating this way may allow Uber or Lyft to argue that they’re software platforms whose transportation services aren’t necessarily core to their businesses (as they’ve been doing, with limited success.) That argument’s viability would obviously hinge entirely on those unknowns, mainly what level of control over drivers Uber would be willing to cede under such a model. An Uber spokesperson told Gizmodo in a statement by email that the company is “not sure whether a fleet model would ultimately be viable in California.”

“This is similar to how Uber Black operated a decade ago, with higher prices and less reliability,” the spokesperson said. “In some models, drivers bring their own cars; in others, the cars are owned by the fleet. In either case, drivers would likely earn a predetermined hourly wage for their time on-app—but, in exchange, fleets would need to monitor and enforce drivers’ activity and efficiency, for instance by putting drivers into shifts, dictating where and when they must drive, and enforcing trip acceptance criteria.”

Many Uber cars are already parts of fleets, especially in New York City, mainly due to the difficulty in obtaining operating licenses.

Both companies have threatened to temporarily shut down in the state if they’re forced to comply with AB5, though both are also banking on the success of a ballot measure, Proposition 22, that goes to vote in November. That initiative would allow app-based gig employers to skirt some of the benefits afforded to drivers with full-time employee classification.

When reached for comment by Gizmodo about the reported licensing plans, a Lyft spokesperson said only that “alternative models” have been explored and reaffirmed the company’s position on Proposition 22.


“We’ve looked at alternative models, and the one that would work best for drivers is what we’re supporting in the ballot measure—they remain independent and can work whenever they want while also receiving additional health care benefits and an earnings guarantee,” Julie Wood, a Lyft spokesperson, said in a statement.

Lyft and Uber could shut down as soon as this week if they’re forced with an order to comply with AB5, though it does not appear that it’s in Uber or Lyft’s best interest to cease operations. Such a move would also disproportionately punish drivers who rely on these companies for income at a time of unprecedented economic uncertainty—though given the overall indifference gig employers have demonstrated toward the well-being of their human workers, would that really come as any surprise?




Something I think about: the whole ethos behind the current idea of a “gig” is that it is not a sole source of income. It’s playing with your band on fridays and saturdays at the bar. It’s tutoring one day a week. It’s mowing your elderly neighbor’s lawn. It’s dog sitting for a friend.

All of the above would be incredibly challenging to derive a livable wage from. Usually because if you break down your hourly income you’re likely under minimum wage, so just “doing it more” won’t fix that. But people still do those things and it’s long been the mental model that Uber/Lyft want to apply to their drivers. There’s at least a logic to it.

But it seems like as a society we generally like the idea of gigs just not on a wide scale. It’s the idea that a publicly-traded multi-billion dollar company being in charge of “gigs” that bothers us. Nobody wants to abolish the neighborhood kids shoveling snow. But if John Deere makes a snow-shoveling “gig app” and starts making billions from venture-capital off of the same kids now we have a problem.