Title: Patel v. 7-Eleven, Inc.

State: massachusetts

Issuer: Massachusetts Supreme Court

Document:

NOTICE:  All slip opinions and orders are subject to formal 
revision and are superseded by the advance sheets and bound 
volumes of the Official Reports.  If you find a typographical 
error or other formal error, please notify the Reporter of 
Decisions, Supreme Judicial Court, John Adams Courthouse, 1 
Pemberton Square, Suite 2500, Boston, MA, 02108-1750; (617) 557-
1030; SJCReporter@sjc.state.ma.us 
 
SJC-13166 
 
DHANANJAY PATEL1 & others2  vs.  7-ELEVEN, INC., & others;3 DP 
MILK STREET INC. & others, third-party defendants.4 
 
 
 
Suffolk.     December 8, 2021. - March 24, 2022. 
 
Present:  Budd, C.J., Gaziano, Lowy, Cypher, Kafker, Wendlandt, 
& Georges, JJ. 
 
 
Independent Contractor Act.  Massachusetts Wage Act.  Statute, 
Construction, Federal preemption.  Federal Preemption.  
Regulation. 
 
 
 
Certification of a question of law to the Supreme Judicial 
Court by the United States Court of Appeals for the First 
Circuit. 
 
 
Shannon Liss-Riordan for the plaintiffs. 
 
 
1 Individually and on behalf of all others similarly 
situated. 
 
2 Safdar Hussain, Vatsal Chokshi, Dhaval Patel, and Niral 
Patel, individually and on behalf of all others similarly 
situated. 
 
 
3 Mary Cadigan and Andrew Brothers.  All claims against 
Cadigan and Brothers have been dismissed. 
 
 
4 DPNEWT01, DP Tremont Street Inc., and DP Jersey Inc. 
 
2 
 
 
Norman M. Leon, of Illinois (Matthew J. Iverson also 
present) for 7-Eleven, Inc. 
 
The following submitted briefs for amici curiae: 
 
Kevin P. Martin, William E. Evans, & Christopher J.C. 
Herbert for Chamber of Commerce of the United States of America 
& another. 
 
Ian D. Roffman & Sara A. Lonks for Financial Services 
Institute, Inc. 
 
Christopher A. Parlo, of New York, Sean P. Lynch, of New 
Jersey, & Mary Grace Parsons for Life Insurance Association of 
Massachusetts & others. 
 
John R. Skelton & Katherine R. Moskop for Retailers 
Association of Massachusetts. 
 
Benjamin B. Reed, of Virginia, & Nora H. Murphy, of 
Maryland, for International Franchise Association & another. 
 
Maura Healey, Attorney General, Kate Watkins & Cynthia 
Mark, Assistant Attorneys General, & David C. Kravitz, Deputy 
State Solicitor, for Attorney General. 
 
Ana Muñoz, Joseph Michalakes, & Audrey Richardson for 
Massachusetts Employment Lawyers Association & another. 
 
James Reilly Dolan, of Maryland, Joel Marcus & Matthew M. 
Hoffman, of the District of Columbia, & Bradley Grossman for 
Federal Trade Commission. 
 
 
 
WENDLANDT, J.  In this case, we answer the following 
certified question regarding G. L. c. 149, § 148B (independent 
contractor statute):5 
"Whether the three-prong test for independent contractor 
status set forth in [the independent contractor statute] 
 
5 A panel of the United States Court of Appeals for the 
First Circuit (certifying court) certified the question pursuant 
to S.J.C. Rule 1:03, as appearing in 382 Mass. 700 (1981), which 
provides in relevant part: 
 
"This court may answer questions of law certified to it by 
. . . a Court of Appeals of the United States . . . when 
requested by the certifying court if there are involved in 
any proceeding before it questions of law of this State 
which may be determinative of the cause then pending in the 
certifying court and as to which it appears to the 
certifying court there is no controlling precedent in the 
decisions of this court." 
3 
 
applies to the relationship between a franchisor and its 
franchisee, where the franchisor must also comply with the 
FTC Franchise Rule."6 
 
We conclude that, where a franchisee is an "individual 
performing any service" for a franchisor, G. L. c. 149, § 148B, 
the three-prong test set forth in the independent contractor 
statute applies to the relationship between a franchisor and the 
individual and is not in conflict with the franchisor's 
disclosure obligations prescribed by the FTC Franchise Rule.7 
1.  Background.  We recite the facts as stated by the 
certifying court.  The plaintiffs have entered into franchise 
agreements with the defendant, 7-Eleven, Inc. (7-Eleven), and 
operate 7-Eleven branded convenience stores in the Commonwealth.  
Pursuant to these agreements, the plaintiffs "are obligated to 
operate their convenience stores around the clock, stock 
 
6 The Federal Trade Commission (FTC) has promulgated a 
series of regulations regarding franchises, 16 C.F.R. §§ 436.1 
et seq., to which the certifying court referred collectively as 
the "FTC Franchise Rule." 
 
7 We acknowledge the amicus briefs submitted by the Chamber 
of Commerce of the United States of America and the Small 
Business Legal Center of the National Federation of Independent 
Business; Financial Services Institute, Inc.; the Life Insurance 
Association of Massachusetts, Securities Industry and Financial 
Markets Association, American Council of Life Insurers, and 
National Association of Insurance and Financial Advisors; the 
Retailers Association of Massachusetts; the International 
Franchise Association and Dunkin' Brands, Inc.; the Attorney 
General; the Massachusetts Employment Lawyers Association and 
the Immigrant Worker Center Collaborative; and the Federal Trade 
Commission. 
4 
 
inventory sold by 7-Eleven's preferred vendors, utilize the 7-
Eleven payroll system to pay store staff, and adhere to a host 
of other guidelines."  Patel v. 7-Eleven, Inc., 8 F.4th 26, 28 
(1st Cir. 2021).  The agreements classify the plaintiffs as 
independent contractors.  Id.  The plaintiffs do not receive a 
"regular salary"; "[i]nstead, each plaintiff may draw pay from 
[his or her] store's gross profits, after paying various fees 
required by the franchise agreement to 7-Eleven for the 
privilege of doing business with it."  Id. 
The plaintiffs filed a complaint in the Superior Court, 
alleging that they are, in fact, 7-Eleven employees and have 
been misclassified as independent contractors in violation of 
the independent contractor statute, as well as G. L. c. 149, 
§ 148 (wage act), and G. L. c. 151, §§ 1, 7 (minimum wage law).  
The case was removed to the United States District Court for the 
District of Massachusetts.  On cross motions for summary 
judgment, a Federal judge allowed summary judgment in favor of 
7-Eleven; relying on Monell v. Boston Pads, LLC, 471 Mass. 566 
(2015), he concluded that the independent contractor statute 
does not apply to franchisee-franchisor relationships because 
there is an "inherent conflict" between the independent 
contractor statute and the FTC Franchise Rule.  Patel v. 7-
Eleven, Inc., 485 F. Supp. 3d 299, 309 (D. Mass. 2020). 
5 
 
The plaintiffs appealed.  Explaining that "there appears to 
be a conflict between the [independent contractor statute] and 
the 'exert[ing] . . . control' prong of the FTC Franchise Rule," 
the certifying court certified the aforementioned question.  
Patel, 8 F.4th at 28. 
2.  Discussion.  We begin with an overview of the two 
relevant laws -- the independent contractor statute and the FTC 
Franchise Rule -- to guide our analysis. 
a.  Independent contractor statute.  The independent 
contractor statute "establishes a standard to determine whether 
an individual performing services for another shall be deemed an 
employee or an independent contractor for purposes of our wage 
statutes," G. L. c. 149 and G. L. c. 151.  Somers v. Converged 
Access, Inc., 454 Mass. 582, 589 (2009).  Proper classification 
is important to the determination of the protections afforded to 
an individual under the wage statutes.  Classification as an 
"employee" generally entitles an individual to, inter alia, 
timely payment of wages earned, and holiday and vacation 
payments due, G. L. c. 149, § 148; a minimum wage, G. L. c. 151, 
§ 1; overtime pay, G. L. c. 151, § 1B; and a private cause of 
action to enforce these rights, along with the ability to 
recover the costs of litigation, attorney's fees, and liquidated 
damages (in the form of treble damages for lost wages and other 
benefits) for violations of the wage statutes, G. L. c. 149, 
6 
 
§ 150, and G. L. c. 151, § 1B.  Individuals who are not 
classified as "employees" do not enjoy these statutory 
protections.  Thus, we have recognized that "[a] legislative 
purpose behind the independent contractor statute is to protect 
employees from being deprived of the benefits enjoyed by 
employees through their misclassification as independent 
contractors."  Somers, supra at 592. 
Employers who misclassify employees as independent 
contractors enjoy what might be viewed as a windfall.  
Misclassification permits an employer to avoid its statutory 
obligations to its workforce.  Misclassification further allows 
employers to shift certain financial burdens to the Commonwealth 
and the Federal government.8  In addition, misclassification 
"gives an employer . . . an unfair competitive advantage over 
employers who correctly classify their employees and bear the 
concomitant financial burden."9  Somers, 454 Mass. at 593.  See 
 
8 Employers who misclassify employees as independent 
contractors enjoy unwarranted reprieve from financial 
contributions to, inter alia, Social Security and Medicare, 
unemployment insurance, and workers' compensation, and from 
employee income tax withholdings.  See Somers, 454 Mass. at 592-
593, citing 26 U.S.C. § 3102 (2006) (Federal tax withholding); 
G. L. c. 62B, § 2 (State tax withholding); G. L. c. 151A, § 14 
(employee unemployment insurance); G. L. c. 152, § 25A (workers' 
compensation insurance); 830 Code Mass. Regs. § 62B.2.1(4)(a)(1) 
(2005) (employer's payroll tax obligations). 
 
9 See Advisory 2008/1, Attorney General's fair labor and 
business division, at 1 ("Misclassification undermines fair 
market competition and negatively impacts the business 
7 
 
S. Leberstein & C. Ruckelshaus, National Employment Law Project, 
Independent Contractor vs. Employee:  Why Independent Contractor 
Misclassification Matters and What We Can Do to Stop It, at 1 
(May 2016) ("Whether companies treat their workers as employees 
or independent contractors has profound implications for 
workers' pay and benefits, for employers, and for public 
revenues"). 
The independent contractor statute aims to curb this 
unwarranted windfall.  It evinces the Legislature's broad, 
remedial intent "to protect workers by classifying them as 
employees, and thereby grant them the benefits and rights of 
employment, where the circumstances indicate that they are, in 
fact, employees."  Depianti v. Jan-Pro Franchising Int'l, Inc., 
465 Mass. 607, 620 (2013), quoting Taylor v. Eastern Connection 
Operating, Inc., 465 Mass. 191, 198 (2013).  See Sebago v. 
Boston Cab Dispatch, Inc., 471 Mass. 321, 327 (2015).  To that 
end, the statute does not cabin "employees" to those individuals 
under the control and direction of a putative employer, as 
provided under the common law.  See Chambers v. RDA Logistics, 
Inc., 476 Mass. 95, 104 (2016) ("In enacting the [independent 
 
environment in the Commonwealth"); F. Carré, Economic Policy 
Institute, (In)dependent Contractor Misclassification, at 5 
(June 8, 2015) ("employers who play by the rules . . . are 
disadvantaged by higher labor and administration costs relative 
to employers that misclassify"). 
8 
 
contractor] statute, the Legislature intended to provide greater 
protection than did the common-law 'right to control' test that 
previously governed misclassification claims"); Advisory 2008/1, 
Attorney General's fair labor and business division, at 2 
(Advisory 2008/1) (tracking evolution of employee classification 
tests from common-law control and direction test to independent 
contractor statute). 
Instead, the statute evidences the Legislature's intent to 
cast a wider net.  It sets forth a presumption that "an 
individual performing any service" for a putative employer 
"shall be" considered an "employee" for purposes of the wage 
statutes.  G. L. c. 149, § 148B.  See Sebago, 471 Mass. at 327.  
Once the individual has shown the performance of services for 
the putative employer, the alleged employer may rebut the 
presumption by establishing each of the following three prongs 
(known as the "ABC test") by a preponderance of the evidence: 
"(1) the individual is free from control and direction in 
connection with the performance of the service, both under 
his contract for the performance of service and in fact; 
and 
 
"(2) the service is performed outside the usual course of 
the business of the employer; and, 
 
"(3) the individual is customarily engaged in an 
independently established trade, occupation, profession or 
business of the same nature as that involved in the service 
performed." 
 
9 
 
G. L. c. 149, § 148B (a).  See Somers, 454 Mass. at 589.  If any 
one of these criteria is not shown, the statute directs that the 
individual is an employee for purposes of our wage statutes and 
entitled to the protections set forth therein.  See Sebago, 
supra at 327. 
 
Employers who misclassify their employees do so at their 
peril.  See G. L. c. 149, § 148B (d) (providing criminal and 
civil remedies for violations of wage statutes); G. L. c. 149, 
§ 27C (authorizing various penalties, including fines, 
imprisonment, and civil penalties).  An individual who 
successfully shows that he or she has been misclassified "shall 
be awarded treble damages, as liquidated damages, for any lost 
wages and other benefits and shall also be awarded the costs of 
the litigation and reasonable attorneys' fees."  G. L. c. 149, 
§ 150.  See Somers, 454 Mass. at 589-590.  These sanctions apply 
to both business entities and certain individual officers.  
G. L. c. 149, § 148B (d) ("Any entity and the president and 
treasurer of a corporation and any officer or agent having the 
management of the corporation or entity shall be liable for 
violations of this section").  See Advisory 2008/1, supra at 4-5 
(explaining that G. L. c. 149, § 148B [d], "creates liability 
for both business entities and individuals, including corporate 
officers, and those with management authority over affected 
workers"). 
10 
 
 
b.  FTC Franchise Rule.  The FTC Franchise Rule does not 
concern employee misclassification; instead, it was adopted in 
the late 1970s in response to widespread deception in the sale 
of franchises, including misrepresentations related to the costs 
to purchase a franchise and the terms and conditions under which 
a franchise would operate.  These misrepresentations lured 
unsuspecting and often unsophisticated prospective franchisees 
with false promises regarding potential earnings.  43 Fed. Reg. 
59,614, 59,625 (1978).  To address these problems, the FTC 
Franchise Rule considers a franchisor's failure to provide 
presale disclosures specified in the rule to a prospective 
franchisee to be an unfair or deceptive act or practice in 
violation of section 5 of the Federal Trade Commission Act, 15 
U.S.C. § 45(a)(1).  See 16 C.F.R. §§ 436.2, 436.9.  It also 
prohibits a franchisor from making unilateral, material 
alterations to the terms and conditions of the franchise 
agreement without providing timely notice to the franchisee.  16 
C.F.R. § 436.2(b). 
These disclosure requirements apply to, among others, 
"franchisors," which includes "any person who grants a franchise 
and participates in the franchise relationship."  16 C.F.R. 
§ 436.1(k).  A "franchise," in turn, is defined as a continuing 
commercial relationship where, inter alia, the franchisor "will 
exert or has authority to exert a significant degree of control 
11 
 
over the franchisee's method of operation, or provide 
significant assistance in the franchisee's method of operation."  
16 C.F.R. § 436.1(h)(2).10  Thus, under the FTC Franchise Rule, 
the required disclosures are triggered when a prospective 
franchisor makes one of two elections -- either to exert a 
significant degree of control over the franchisee's method of 
operation or to provide significant assistance in the 
franchisee's method of operation. 
c.  Statutory construction.  With this background in mind, 
we turn to the certified question, which is one of statutory 
construction.  Accordingly, our analysis begins with "the 
 
10 The FTC Franchise Rule defines a "franchise" as "any 
continuing commercial relationship or arrangement, whatever it 
may be called, in which the terms of the offer or contract 
specify, or the franchise seller promises or represents, orally 
or in writing, that: 
 
"(1) The franchisee will obtain the right to operate a 
business that is identified or associated with the 
franchisor's trademark, or to offer, sell, or distribute 
goods, services, or commodities that are identified or 
associated with the franchisor's trademark; 
 
"(2) The franchisor will exert or has authority to exert a 
significant degree of control over the franchisee's method 
of operation, or provide significant assistance in the 
franchisee's method of operation; and 
 
"(3) As a condition of obtaining or commencing operation of 
the franchise, the franchisee makes a required payment or 
commits to make a required payment to the franchisor or its 
affiliate." 
 
16 C.F.R. § 436.1(h). 
12 
 
'principal source of insight into legislative intent'" -- the 
plain language of the statute.  Tze-Kit Mui v. Massachusetts 
Port Auth., 478 Mass. 710, 712 (2018), quoting Water Dep't of 
Fairhaven v. Department of Envtl. Protection, 455 Mass. 740, 744 
(2010).  If the statutory language is clear and unambiguous, it 
is "conclusive as to legislative intent."  Monell, 471 Mass. at 
575.  "Where[, however,] the meaning of a statute is not plain 
from its language, familiar principles of statutory construction 
guide our interpretation."  DiFiore v. American Airlines, Inc., 
454 Mass. 486, 490 (2009). 
"[A] statute must be interpreted according to the intent of 
the Legislature ascertained from all its words construed by 
the ordinary and approved usage of the language, considered 
in connection with the cause of its enactment, the mischief 
or imperfection to be remedied and the main object to be 
accomplished, to the end that the purpose of its framers 
may be effectuated." 
 
Harvard Crimson, Inc. v. President & Fellows of Harvard College, 
445 Mass. 745, 749 (2006), quoting Hanlon v. Rollins, 286 Mass. 
444, 447 (1934). 
The plain language of the independent contractor statute 
neither expressly includes nor expressly excludes franchisees 
from its reach.  Thus, it does not itself answer the certified 
question.  Nonetheless, the Legislature's silence is instructive 
because it contrasts sharply with other wage and employment-
related statutes in which the Legislature has demonstrated its 
intent to exclude certain categories of workers by express 
13 
 
language.  See, e.g., G. L. c. 149, § 148 (specifying wage act 
does not apply to certain hospital employees, employees of 
cooperative association, or "casual employees"); G. L. c. 152, 
§ 1 (4) (excluding certain workers from definition of "employee" 
in connection with workers' compensation statute).  Therefore, 
it is apt that, "[f]rom this silence, we infer that the 
Legislature intended the criteria for identifying independent 
contractors to be applied in the context" of the franchise 
relationship.  Sebago, 471 Mass. at 328. 
This conclusion is bolstered by the statute's broad 
remedial purpose.  See Monell, 471 Mass. at 575 ("a remedial 
statute . . . should be given a broad interpretation . . . in 
light of its purpose . . . to promote the accomplishment of its 
beneficent design" [quotation and citation omitted]).  In fact, 
we have previously observed that, in light of the independent 
contractor statute's remedial design, "it would be an error to 
imply . . . a limitation where the statutory language does not 
require it."  Depianti, 465 Mass. at 621, quoting Psy-Ed Corp. 
v. Klein, 459 Mass. 697, 708 (2011).  By contrast, categorically 
excluding franchise relationships from the statute's ambit would 
permit employers to evade obligations under the wage statutes 
merely by labeling what is actually an employment relationship 
as a "franchise" relationship, allowing employers to foil the 
legislative intent to protect workers as employees when they 
14 
 
are, in fact, employees.  See Depianti, supra at 619-620 
(rejecting claim that statute does not apply absent written 
employment contract in view of statute's remedial nature). 
Moreover, we have rejected the argument that the 
independent contractor statute should not apply where an 
industry is separately or even highly regulated.  See Sebago, 
471 Mass. at 328 (absent any legislative intent to exclude 
highly regulated taxicab industry, we "infer that the 
Legislature intended the criteria for identifying independent 
contractors to be applied in the context of [even a highly 
regulated] industry").  Notably, we have applied a nearly 
identical ABC test (from the unemployment compensation statute, 
G. L. c. 151A, § 2 [a]-[c]) in the context of a franchise 
relationship.  See Coverall N. Am., Inc. v. Commissioner of the 
Div. of Unemployment Assistance, 447 Mass. 852, 857-859 (2006) 
(affirming division decision in view of franchisor's failure to 
make required showing under third prong of ABC test). 
d.  Purported conflict between ABC test and FTC Franchise 
Rule.  The certifying court suggests a conflict between the 
first prong of the independent contractor statute and the FTC 
Franchise Rule that could "impact[] untold sectors of workers 
and business owners across the Commonwealth."  Patel, 8 F.4th at 
15 
 
29.11  7-Eleven contends that classifying franchisees as 
employees under the statute places the entire market for 
franchise relationships in the Commonwealth at risk.12  We 
examine the asserted conflict and 7-Eleven's dire predictions in 
view of "[o]ur respect for the Legislature's considered 
judgment[, which] dictates that we interpret the statute to be 
sensible, rejecting unreasonable interpretations unless the 
clear meaning of the language requires such an interpretation."  
Hovagimian v. Concert Blue Hill, LLC, 488 Mass. 237, 241 (2021), 
quoting Meshna v. Scrivanos, 471 Mass. 169, 173 (2015).  See 
Commonwealth v. Dodge, 428 Mass. 860, 865 (1999), quoting Beeler 
v. Downey, 387 Mass. 609, 616 (1982) ("[w]e must read the 
statute in a way to give it a sensible meaning").  As the United 
States Supreme Court has observed regarding Congress, the 
 
11 In particular, the certifying court stated that "there 
appears to be a conflict" between the first prong of the 
independent contractor statute, on the one hand, and the FTC 
Franchise Rule, on the other.  Compliance with the latter, the 
court believed, would potentially make every franchisee an 
employee.  Patel, 8 F.4th at 28-29. 
 
12 7-Eleven maintains that requiring franchisors to make the 
requisite showing under the first prong of the ABC test (that 
the franchisee is "free from control and direction" in 
connection with the performance of services for the franchisor) 
necessarily conflicts with the FTC Franchise Rule, which defines 
a franchisor as, inter alia, an entity that exercises 
significant control over a franchisee's method of operation.  7-
Eleven contends that the Legislature must have intended to 
exclude such relationships from application of the independent 
contractor statute altogether. 
16 
 
Legislature "does not, one might say, hide elephants in 
mouseholes."  Whitman v. American Trucking Ass'ns, 531 U.S. 457, 
468 (2001). 
Here, however, we are not faced with a conflict between a 
construction of the independent contractor statute such that it 
applies in the franchise context, on the one hand, and a 
franchisor's required compliance with the FTC Franchise Rule, on 
the other.  The FTC Franchise Rule "is a pre-sale disclosure 
rule.  While the Rule requires franchisors to provide a 
Financial Disclosure Document to prospective purchasers, it does 
not regulate the substantive terms of the franchisor-franchisee 
relationship."  Letter from Federal Trade Commission Chair 
Joseph Simons to Representative Jan Schakowsky, at 1 (Oct. 15, 
2020).  Compliance with these disclosure requirements does not 
mandate that a franchisor exercise any particular degree of 
control over a franchisee.  Rather, the regulation establishes 
rules for when the franchisor chooses to exercise a certain 
degree of control.  Indeed, even where a franchisor does not 
exercise any control over the franchisee's method of operation, 
the FTC Franchise Rule's disclosure obligations are triggered so 
long as the franchisor "provide[s] significant assistance in the 
franchisee's method of operation" (emphasis added).  16 C.F.R. 
§ 436.1(h)(2). 
17 
 
To be sure, the FTC Franchise Rule's disclosure obligations 
are also triggered where the franchisor elects to exercise a 
"significant degree of control over the franchisee's method of 
operation."  16 C.F.R. § 436.1(h)(2).  It is this election that 
appears to be at the nub of the certifying court's concern.  
Specifically, the court was troubled that a franchisor that 
elects to exercise a "significant degree of control over the 
franchisee's method of operation" might not be able to show that 
the individual is "free from control and direction in connection 
with the performance of the service," under the first prong of 
the ABC test.  G. L. c. 149, § 148B. 
Even where the franchisor makes that election, however, the 
FTC Franchise Rule's disclosure obligations do not run counter 
to proper classification of employees under the independent 
contractor statute.  Thus, the identified "conflict" between the 
FTC Franchise Rule and the independent contractor statute rests 
on a misapprehension of what the former requires -- that is, 
timely disclosures to the prospective franchisee. 
18 
 
Our decision in Monell is inapposite.13  There, we addressed 
an actual conflict between two State statutes.14  Here, we do not 
face a conflict between two State laws.  Instead, we are asked 
to consider whether a conflict exists between Federal 
regulations and the first prong of the State independent 
contractor statute.  Conflicts between Federal and State laws 
are governed by the principles of preemption.  See, e.g., 
Louisiana Pub. Serv. Comm'n v. Federal Communications Comm'n, 
476 U.S. 355, 368 (1986); Roma, III, Ltd. v. Board of Appeals of 
Rockport, 478 Mass. 580, 587 (2018).  Under those principles, as 
applicable to the case at hand, the FTC Franchise Rule preempts 
 
13 The Federal District Court judge relied on Monell in 
connection with his summary judgment decision.  Patel, 485 F. 
Supp. 3d at 310.  For the reasons set forth infra, we agree with 
the certifying court that Monell did not "decide the issue 
presented in this case."  Patel, 8 F.4th at 29. 
 
14 Monell concerned a conflict between the independent 
contractor statute and the real estate licensing statute, which 
required a real estate salesperson to conduct real estate 
business only as a representative of a real estate broker and 
prohibited a real estate salesperson from operating his or her 
own real estate business.  Monell, 471 Mass. at 572-573.  
Compliance with these regulatory requirements made it impossible 
for a real estate broker to satisfy either the second prong or 
the third prong of the independent contractor statute, id. at 
575; yet, the real estate licensing statute expressly authorized 
a real estate salesperson to affiliate with a broker either as 
an employee or as an independent contractor, id. at 576.  Guided 
by the canon of statutory construction that a specific statute 
controls over provisions of a general statute, id. at 577, we 
concluded that the independent contractor statute did not apply 
to real estate brokers.  In doing so, we emphasized "the limited 
nature of our holding."  Id. 
19 
 
the independent contractor statute only if the latter "actually 
conflicts" with the former in the sense that "it is impossible 
for a private party to comply with both state and federal 
requirements, or where state law stands as an obstacle to the 
accomplishment and execution of the full purposes and objectives 
of Congress" (quotation and citation omitted).  English v. 
General Elec. Co., 496 U.S. 72, 79 (1990).15 
We are presented with no such conflict.  A franchisor can 
comply with the FTC Franchise Rule to make the prescribed 
disclosures, and in situations where a franchisee is deemed an 
employee under the independent contractor statute, the 
franchisor can comply with its obligations under the wage 
statutes.  Compliance with these latter obligations does not 
render it impossible for a franchisor to comply with the FTC 
Franchise Rule.  The FTC Franchise Rule supports this 
conclusion.  It states that "[t]he FTC does not intend to 
preempt the franchise practices laws of any state or local 
government, except to the extent of any inconsistency with [the 
FTC Franchise Rule]," and that "[a] law is not inconsistent with 
 
15 Preemption can be either express, as evidenced through 
congressional statement or enactment, or implied.  English, 496 
U.S. at 78-79.  Preemption may be implied either through an 
actual conflict or through "field preemption," such as when a 
State law "regulates conduct in a field that Congress intended 
the Federal Government to occupy exclusively."  Id. at 79.  
Neither express nor field preemption is at issue in this case. 
20 
 
[the FTC Franchise Rule] if it affords prospective franchisees 
equal or greater protection."  16 C.F.R. § 436.10(b). 
Setting aside that compliance with the FTC Franchise Rule 
only requires certain timely disclosures, the franchisor's 
election to exercise "a significant degree of control over the 
franchisee's method of operation" does not render every 
franchisee an employee under the first prong of the ABC test; 
the two tests are not the same.  This is because "control over 
the franchisee's method of operation" does not require a 
franchisor to exercise "control and direction" in connection 
with the franchisee's "performing any service" for the 
franchisor -- the relevant inquiry under the first prong of the 
ABC test.  That the election under the FTC Franchise Rule and 
the first prong of the ABC test employ the same word -- control 
-- does not create an inherent conflict.  Indeed, "significant 
control" over a franchisee's "method of operation" and "control 
and direction" of an individual's "performance of services" are 
not necessarily coextensive.  Cf. Goro vs. Flowers Foods, Inc., 
U.S. Dist. Ct., No. 17-CV-2580 TWR (JLB) (S.D. Cal. Sept. 21, 
2021) ("For example, the phrase 'method of operation' in the FTC 
Franchise Rule is broader than the phrase 'performance of . . . 
[services]' appearing in the ABC Test.  While a franchisor may 
dictate that a franchisee include certain food items on its 
menu, that does not mean that a franchisor must dictate the 
21 
 
franchisee's hiring decisions, the layout of its kitchen, or the 
wages it pays its employees"); Wickham v. Southland Corp., 168 
Cal. App. 3d 49, 54 (1985) (franchisor's exercise of significant 
control over business operations not equivalent to control over 
franchisee's performance of services where franchisee hired and 
fired, set wages for and instructed employees, and controlled 
day-to-day store operations). 
Courts in other jurisdictions have found franchisors 
electing to assert significant control over the franchisee's 
method of operation to have made the requisite showing under the 
first prong of the ABC test or its equivalent.  See, e.g., 
Haitayan vs. 7-Eleven, Inc., U.S. Dist. Ct., Nos. 17-7454 DSF 
(ASx), 18-5465 DSF (ASx) (C.D. Cal. Sept. 8, 2021) (applying 
common-law right to control test, akin to first prong of ABC 
test, and finding franchisees were not employees where 
franchisees controlled "when they work, how much they work, and 
when they take vacations," employed multiple individuals, and 
exercised control over "the hiring, firing, wages, discipline, 
scheduling and staffing of their employees"); 7-Eleven, Inc. vs. 
Sodhi, U.S. Dist. Ct., No. 13-3715 (MAS) (JS) (D.N.J. May 31, 
2016) (franchisee was not employee under Fair Labor Standards 
Act's definition of "employee," which includes analysis of right 
to control similar to first prong of ABC test, where, inter 
alia, franchisee did not have regular schedule, wore specified 
22 
 
uniform only sporadically, traveled around country on business 
unrelated to franchisor, was "hands off" in his management of 
convenient store, had other business ventures, and set store 
prices); Jan-Pro Franchising Int'l, Inc. v. Depianti, 310 Ga. 
App. 265, 267-268 (2011) (applying first prong of ABC test and 
concluding that franchisor, which did not pay subfranchisee and 
did not hold accounts serviced by subfranchisee or invoice 
customers to whom subfranchisee provided direct cleaning 
services, was not employer).16 
Given that the first prong of the ABC test incorporates the 
common-law "right to control" test that preceded the enactment 
of the independent contractor statute, this result is not 
surprising.  Chambers, 476 Mass. at 104 ("the 'right to control' 
test is incorporated in the first prong of the [independent 
contractor] statute").  See Dynamex Operations W., Inc. v. 
Superior Court, 4 Cal. 5th 903, 958 (2018) (acknowledging that 
worker who would be considered employee under common-law test 
"would, a fortiori, also properly be treated as an employee" for 
 
16 The controls required under the Lanham Act, 15 U.S.C. 
§ 1064(5)(A), do not themselves preclude the showing required 
under the first prong of the ABC test.  Cf. Depianti, 465 Mass. 
at 615, quoting Oberlin v. Marlin Am. Corp., 596 F.2d 1322, 1327 
(7th Cir. 1979) ("the controls that franchisors are required to 
maintain under the Lanham Act are not intended 'to create a 
[F]ederal law of agency . . . [or to] saddle the licensor with 
the responsibilities under [S]tate law of a principal for his 
agent'"). 
23 
 
purposes of first prong of ABC test).  Thus, application of the 
first prong of the ABC test to franchise relationships can 
hardly be considered a barrier to such relationships given that 
the previous direction and control test has not presented an 
insurmountable hurdle.  See, e.g., D. Swift, C. Niu, L. 
Despradel, & C. Li, FRANdata, Franchise Business Economic 
Outlook 2020:  Franchise Growth Continues, at 8 (2019) (citing, 
in report prepared for International Franchise Association, 
steady growth of number of franchises across country); 
International Franchise Association, Economic Impact of 
Franchising in Massachusetts (estimating over 12,400 franchise 
establishments existed in Commonwealth in 2020). 
To the contrary, despite 7-Eleven's dire predictions that 
application of the ABC test to franchise relationships will end 
franchising in the Commonwealth, other courts have done so 
apparently without the predicted apocalyptic end of franchise 
arrangements in their respective jurisdictions.  See, e.g. Mujo 
v. Jani-King Int'l, Inc., 13 F.4th 204, 210 (2d Cir. 2021) 
("individual can be an employee . . . if an application of the 
ABC test would deem that individual an employee, even if that 
same individual is also a franchisee"); Vazquez v. Jan-Pro 
Franchising Int'l, Inc., 986 F.3d 1106, 1124 (9th Cir. 2021) 
(upholding application of ABC test to franchises); Jason 
Robert's, Inc. v. Administrator, Unemployment Compensation Act, 
24 
 
127 Conn. App. 780, 787-788 (2011) (holding ABC test applies to 
franchises).  Cf. Williams v. Jani-King of Philadelphia, Inc., 
837 F.3d 314, 324-325 (3d Cir. 2016) (noting, in class 
certification appeal, that "[a] franchisee may be an employee or 
an independent contractor depending on the nature of the 
franchise system controls").  Indeed, as we noted supra, we also 
have applied a nearly identical ABC test in the franchise 
context, yet franchising continues in the Commonwealth.17  
Coverall N. Am., Inc., 447 Mass. at 857-859. 
 
17 While the certifying court and the parties have focused 
on the first prong of the ABC test, we note that courts have 
also found franchisors to have satisfied the second prong of the 
test or its equivalent, requiring the putative employer to show 
that the service is performed outside the usual course of the 
business of the employer.  See, e.g., Haitayan, U.S. Dist. Ct., 
Nos. 17-7454 DSF (ASx), 18-5465 DSF (ASx) (C.D. Cal. Sept. 8, 
2021) (franchisees operating convenience stores conduct business 
outside franchisor's core business of franchising); Jan-Pro 
Franchising Int'l, Inc., 310 Ga. App. at 268-269 (finding second 
prong satisfied because franchisor's business was to establish 
trademark and cleaning system and then license it to franchisees 
whereas franchisee marketed to, invoiced, and collected payment 
from clients). 
 
Franchisors have similarly been held to have satisfied the 
third prong of the ABC test, requiring the putative employer to 
show that the individual is customarily engaged in an 
independently established trade, occupation, profession, or 
business of the same nature as that involved in the service 
performed.  See, e.g., Jan-Pro Franchising Int'l, Inc., supra at 
269-270 (franchisee wears "different hat" from franchisor, 
satisfying requisite showing under third prong of ABC test, 
where franchisee can expand operations and work for several 
clients).  Of course, any analysis of whether the ABC test is 
met must be done on a case-by-case basis.  By citing these 
cases, we do not suggest any particular result under the facts 
of the present case. 
25 
 
e.  Additional guidance.  We respond briefly to the 
certifying court's invitation for "any further guidance . . . on 
any other relevant aspect of Massachusetts law that [we] 
believe[] would aid in the proper resolution of the issues 
presented here."  Patel, 8 F.4th at 29. 
First, nothing in the independent contractor statute 
prohibits legitimate franchise relationships among independent 
entities that are not created to evade employment obligations 
under the wage statutes.  See Advisory 2008/1, supra at 5 ("The 
[office of the Attorney General] is cognizant that there are 
legitimate independent contractors and business-to-business 
relationships in the Commonwealth.  These business relationships 
are important to the economic wellbeing of the Commonwealth and, 
provided that they are legitimate and fulfill their legal 
requirements, they will not be adversely impacted by enforcement 
of the [independent contractor statute].  The difficulty arises 
when businesses are created and maintained in order to avoid the 
[independent contractor statute]"). 
Second, distinguishing between legitimate arrangements and 
misclassification requires examination of the facts of each 
case, which begins with a threshold determination whether the 
putative employee "perform[s] any service" for the alleged 
employer.  G. L. c. 149, § 148B.  This threshold is not 
satisfied merely because a relationship between the parties 
26 
 
benefits their mutual economic interests.  See Jinks v. Credico 
(USA) LLC, 488 Mass. 691, 696 (2021).  Nor is required 
compliance with Federal or State regulatory obligations enough, 
in isolation, to satisfy this threshold inquiry.  See Sebago, 
471 Mass. at 329-331 (compliance with regulatory leasehold 
mandated by regulations was not dispositive in determining 
whether individual "performs any service" for putative 
employer). 
Third, we briefly address 7-Eleven's contention that, 
because compliance with the FTC Franchise Rule necessarily 
renders every franchisee an employee for purposes of the 
Massachusetts wage statutes, and because such a finding 
precludes charging a franchisee fee pursuant to our decision in 
Awuah v. Coverall N. Am., Inc., 460 Mass. 484, 498 (2011), the 
entire franchise model in the Commonwealth is in jeopardy.  As 
discussed supra, 7-Eleven's fear rests on the faulty premise 
that application of the ABC test will result in every franchisee 
being classified as an employee of the franchisor.  In addition, 
in Awuah, we concluded that "to the extent that such [franchise] 
fees are paid back to [the franchisor] out of wages earned from 
[the franchisor], they represent a prohibited assignment of an 
employee's future wages to his employer."  Id. at 498.  This 
does not mean, of course, that, where appropriate, a franchise 
fee cannot be assessed as a cost of doing business deductible 
27 
 
from gross revenue rather than from wages, even if, under the 
ABC test, the franchisee is deemed to be an employee.  See id. 
at 493 n.20 (acknowledging that Federal court's treatment of 
gross revenue as equivalent to wages involved "a strained 
interpretation" that failed to account for other costs of doing 
business).  See also Mujo, 13 F.4th at 212 ("Even assuming that 
the franchisees are employees who receive wages, the deducted 
[franchise] fees are not wages under the [Connecticut minimum 
wage] statute"). 
We express no opinion as to how the ABC test applies to the 
facts of the present case.  See Depianti, 465 Mass. at 619 n.14. 
3.  Conclusion.  For the reasons stated, we conclude that 
the independent contractor statute applies to the franchisor-
franchisee relationship and is not in conflict with the 
franchisor's disclosure obligations set forth in the FTC 
Franchise Rule. 
The Reporter of Decisions is to furnish attested copies of 
this opinion to the clerk of this court.  The clerk in turn will 
transmit one copy, under the seal of the court, to the clerk of 
the United States Court of Appeals for the First Circuit, as the 
answer to the question certified, and will also transmit a copy 
to each party.