1851

The gig economy is a job market where people work on short-term projects or freelance gigs instead of having permanent jobs. They often find these gigs through apps or online platforms. There are, of course, laws and regulations in place that impact the gig economy. But how is all of this affecting the franchise industry?&nbsp;The intersection of gig economy regulations and franchising models presents both challenges and opportunities. 1851 Franchise spoke with&nbsp;<a href="https://www.linkedin.com/in/pete-potente-1411802/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=gig-economy-laws-and-franchising-2726384" target="_blank" rel="nofollow">Pete Potente</a>, CEO and founder of&nbsp;<a href="https://potente.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=gig-economy-laws-and-franchising-2726384" target="_blank" rel="nofollow">POTENTE</a>, to learn more.“The embrace of gig workers in the post-pandemic era has led to a significant increase in their integration with franchising models embracing flexibility and entrepreneurship,” he said.&nbsp;The gig economy is part of a broader trend where individuals are increasingly seeking independence and control over their work schedules. This desire aligns well with the franchising model, which offers the opportunity to operate within an established business framework.However, the current legislation includes a bias that significantly impacts franchisors.&nbsp;“The current legislation skews in favor of classifying workers as employees over independent contractors, which, in effect, heightens employer liability and increases operational costs that will likely need to be passed on to the customer,” Potente said.&nbsp;This reclassification requires franchisors to navigate complex regulatory landscapes while balancing the need to maintain profitability, and, in short, costs the consumer more money.The rapid growth of the gig economy has also highlighted inadequacies in benefits for gig workers, including access to medical care and retirement savings, according to Potente. This concern underscores the necessity for a clear distinction between W-2 employees and gig workers, as it impacts how franchisors manage their workforce.So why not reclassify gig workers as employees to ensure they receive proper benefits? In short, because it is expensive to do so.“Franchisors navigating gig economy regulations may encounter cost-related challenges when reclassifying gig workers as employees,” Potente said. “Employers may see an increased cost with this reclassification, as employees are subject to additional expenses, which may significantly impact the bottom line. Employee expenses may include minimum wage compliance, paid time off, health insurance and workers compensation benefits.”Potente believes that to better support both franchisors and gig workers, legislative changes must aim to balance flexibility with access to essential benefits.&nbsp;“Ending misclassification is a crucial step, but should be accompanied by measures that preserve the flexibility desired by gig workers while ensuring access to benefits like health care and retirement savings,” he said.&nbsp;Collaborating with third-party staffing companies emerges as a viable strategy for franchisors. These companies can provide hourly workers, thereby offering benefits like access to a vetted pool of W-2 employees and shifting liability from the franchisor to the staffing company. This approach helps franchisors manage their workforce more effectively while mitigating legal and financial risks.Franchising offers entrepreneurs an incredible opportunity to own their own business with an existing support model. It does, however, also come with the responsibility of employing a team of individuals, which in itself can be a complex process requiring careful consideration.“Franchising offers a promising avenue for businesses in the gig economy to mitigate liability associated with the self-employed model while enhancing profits, performance and brand recognition,” said Potente. “By professionalizing services and leveraging the entrepreneurial energy of franchising, businesses can drive innovation and explore new opportunities in operational systems. However, solving misclassification issues is the best first step for all involved.”Interested in learning more about franchising? Check out the following resources on 1851 Franchise:<ul><li><a href="http://1851growthclub.com/?utm_source=1851franchise.com&utm_medium=article&utm_campaign=gig-economy-laws-and-franchising-2726384" target="_blank" rel="nofollow">1851 Growth Club</a></li><li><a href="https://1851franchise.com/heres-whats-trending-in-franchise-innovation-for-2024-2725604#buying-a-franchise">Here’s What's Trending in Franchise Innovation for 2024</a></li><li><a href="https://1851franchise.com/how-to-successfully-transition-from-employee-to-franchise-owner-2725487#buying-a-franchise">How To Successfully Transition From Employee to Franchise Owner</a></li></ul>

Gig Economy: How Short-Term Work is Changing Franchising

1851 Franchise

Modern times with online job postings and side-hustle culture has created what we call a “gig economy.” Here’s how the trend impacts franchising.

Gig Economy Laws and Franchising

gig-economy-laws-and-franchising

Sola Salons

Sola Salons Eyes Southern Connecticut for Strategic Franchise Expansion

sola-salons-eyes-southern-connecticut-for-strategic-franchise-expansion

Woodhouse Spas

Photo of exterior of Woodhouse Spa location with people walking around outside

Woodhouse Spas: A Recession-Resistant Franchise Opportunity With Unmatched Support

woodhouse-spas-recession-resistant-franchise-opportunity

Sylvan Learning

Pasadena Weekly: Sylvan Learning Pasadena Offers Free Tutoring for Students Impacted by Local Fires

sylvan-learning-pasadena-free-tutoring-fire-support

BIGGBY COFFEE

BIGGBY® COFFEE Names Erin Kaylor as President, Reinforcing People-First Vision

BIGGBY® COFFEE Names Erin Kaylor as President, Reinforcing People-First Vision and Growth-Focused Future

biggby-coffee-names-erin-kaylor-president

Workout Anytime

Design with Workout Anytime logo and photo of Larry Brayman

Workout Anytime Welcomes Larry Brayman as Chief Marketing Officer, Strengthening Leadership Team Amid Growth Surge

workout-anytime-larry-brayman-cmo

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

The Future of Franchising: Trends and Predictions for 2025 and Beyond

the-future-of-franchising-trends-and-predictions-for-2025-and-beyond

Restaurant Business: Crumbl Cools Its Expansion, Refocuses on Profitability

restaurant-business-crumbl-cools-its-expansion-refocuses-on-profitability

Franchise Face-Lifts: Why Major Restaurant Brands Are Betting Big on Remodels

franchise-face-lifts-why-major-restaurant-brands-are-betting-big-on-remodels

How New Tariffs Are Causing Price Hikes and Surcharges for U.S. Businesses and Franchises - 1851

Tariffs Prompt Price Hikes, Surcharges as Businesses (and Franchises) Brace for Rising Costs 

tariffs-prompt-price-hikes-surcharges

Pizza Hut - EYM Group - Chapter 11 Bankruptcy - 77 Pizza Hut Locations Sold - 1851 Franchise

77 Pizza Hut Locations Sold After Franchisee Bankruptcy Filing

pizza-hut-franchisee-bankruptcy-eym-group

Photo of powerlifter, wearing red singlet and white socks, preparing to deadlift

The 5 Business and Life Lessons I Learned from Powerlifting

the-5-business-and-life-lessons-i-learned-from-powerlifting

franchise supplier award design with Locate AI logo and 1851 Franchise badge

Franchise Real Estate Services | Locate AI — Emerging Leaders in Franchise Support

locate-ai-emerging-leaders-in-franchise-support

Consulting and Development | Big Sky Franchise Team — Emerging Leaders in Franchise Support

Big Sky Franchise Team: Expert Consulting for Scalable Growth

consulting-and-development-big-sky-franchise-team-emerging-leaders-in-franchise-support

Emerging Leaders in Franchise Support: 1851 Supplier Highlights

Emerging Leaders in Franchise Support: List of Franchise Suppliers

emerging-leaders-in-franchise-support

Franchisee spotlight image with Randy and Sandy Craft, Children's Lighthouse logo on blue background

The Crafts’ Successful Journey from New Parents to Children’s Lighthouse Franchisees

the-crafts-successful-journey-from-new-parents-to-childrens-lighthouse-franchisees

Franchise Success Stories: Inspiring Tales from the Front Lines

franchise-success-stories

Image of building outline hovering over person's hand

How To Choose the Right Franchise: A Step-by-Step Guide to Success

how-to-choose-the-right-franchise-step-by-step

Most Profitable Restaurant Franchises To Own in 2025 - 1851 Franchise

The Most Profitable Restaurant Franchises to Own in 2025

most-profitable-restaurant-franchises-to-own

Amateur Bodybuilder and Business Partner Bring Passion for Fitness to World Gym Franchise in Fulton, New York

amateur-bodybuilder-and-business-partner-bring-passion-for-fitness-to-world-gym-franchise-in-fulton-new-york

DonutNV Franchise Costs, Fees, Profit and Data for 2025

franchise-deep-dive-donutnv-franchise-costs-fees-profit-and-data

Gig Economy Laws and Franchising

MORE STORIES LIKE THIS