Uber Mulls Switching To Franchise Model In California

Uber Technologies Inc., facing a Thursday (Aug. 20) deadline to reclassify its freelance drivers in California as employees, is considering licensing its brand to independently operated franchises.

Bloomberg News reported that the move, if successful, would be an alternative to classifying them as employees.

Uber is under a court order to categorize its workers as employees rather than as gig workers, a move that would provide the drivers with benefits such as sick and vacation pay, unemployment insurance, workers’ compensation insurance and healthcare.

An Uber spokesman told Bloomberg that the franchise model would look similar to its operations when it launched in 2011, when users were only allowed to hail a black luxury car. The price was 1.5 times that of a taxi. 

“Drivers would likely earn a predetermined hourly wage for their time on-app, but in exchange, fleets would likely monitor and enforce drivers’ activity and efficiency – for instance, by putting drivers into shifts, dictating where and when they drive, and enforcing trip acceptance criteria,” Matt Wing, a spokesman for Uber, told Bloomberg in an email. “We are not sure whether a fleet model would ultimately be viable in California.”

The Daily Mail reported that Lyft is also considering turning to a franchise model in California. A spokeswoman for Lyft said the company has looked at alternative models, but declined to comment on the deliberations.

On Tuesday (Aug. 18), Uber launched a monthly membership designed for anyone who relies on the ride-hailing company for transportation or meal delivery. For $24.99 per month, Uber Pass provides savings on rides, Uber Eats and grocery deliveries through an all-in-one bundle of benefits. It provides users with 10 percent off UberX, XL and Comfort rides; 15 percent off Black, SUV and Premier rides; no charge for deliveries over $15 from Uber Eats orders; 5 percent off Uber Eats deliveries over $15; and no charge for grocery deliveries over $40.

Uber Pass has been introduced in several big U.S. cities, including New York City, Seattle, St. Louis, Nashville and more. It is not offered in California. 

Uber said it will continue operating its food delivery business, Uber Eats, in California – even if its main ridesharing business is forced to shut down.