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Franchisors faced unprecedented challenges in 2020. Enactment of California’s Assembly Bill 5 on January 1, 2020 was just the tip of an iceberg. As the COVID-19 pandemic upended franchise systems across all industries, franchisors grappled with legal, operational and business consequences of AB 5’s “ABC Test.” Are franchisees now employees? Do all types of franchises meet the ABC Test or just some of them? Will franchised businesses be exempt? These questions loomed large one of the most challenging years ever as the franchise industry sought reprieve from AB 5.
Several more bills sought to exempt franchise companies. None gained traction. The last lobbying opportunity was an assembly bill by the same AB 5 author. It passed with exemptions for 18 industries, but franchising was not one of them.