Three teenagers living in San Francisco have created a business idea that might make you think twice. Their company’s name is FlightCar and the premise is that they rent out the cars of those traveling, giving them a share of the proceeds and also free parking at the airport (and a car wash) while they are away. The craziest part? These teens have some pretty nice cars involved in their program, including a Porsche Boxter and a Lotus for rent.
"How does it make sense that there's one parking lot at the airport where there are thousands of cars sitting there and people are paying for them to sit there and do nothing, and there's another parking lot with thousands of cars owned by Hertz?" said Rujul Zaparde, 18-year-old FlightCar CEO.
The Sharing Economy
Zaparde co-founded FlightCar with friends, Kevin Petrovic and Shri Ganeshram, both 19. The boys passed on attending elite colleges in the Northeast and decided to join those in what has been referred to as "sharing economy." Businesses within the “sharing economy” seek to make it easy for people to share their property while earning some money.
It sounds too good to be true right? Well, it is. Companies such as FlightCar are receiving some push-back from government regulations. In the case of FlightCar, SF officials indicate that the company is undercutting other rental car companies and ignoring regulations that govern rental car companies.
"We're simply trying to enforce a consistent standard," said airport spokesman Doug Yakel.
FlightCar - Is it or Isn't it Governed by Rental Car Regulations?
Now the City of San Francisco has filed a lawsuit against FlightCar in hopes that they can shut it down until the start-up has time to comply with regulations, which include pickups/drop-offs in designated areas, as well as paying 10 percent of profits to the airport and $20 per rental transaction fee. I see where this is going…"failure to comply with regulations” seems to be a formal way of saying “Hey! Don’t forget to give us our cut!”
In discussing this changing phenomenon in the economy Yassi Eskandari-Qajar of the Sustainable Economies Law Center, an Oakland-based nonprofit that supports such industries, says "It's happening so fast, practically at breakneck speeds and it's constantly challenging these assumptions cities have made up to this point."
Last year, San Francisco based companies Lyft and Sidecar were issued cease-and-desist orders and $20,000 fines by the California Public Utilities Commission for failure to obtain necessary permits to conduct their businesses.
The main issue in the lawsuit against FlightCar is defining the type of company and business they truly are. On one hand the founders conclude that they are not a traditional rental car company, and therefore they aren't subject to the regulations, however it seems the City of San Francisco doesn't agree.
Despite the legal potholes FlightCar has seemingly encountered, I wish I’d thought of such a clever idea! I don’t necessarily know that I would trust some complete stranger with my car, even though it’s a Scion and not a Porsche. However, if I were a frequent traveler required to pay the astronomical airport parking fees, I might find myself thinking twice. Kudos to these boys for taking a leap into the unknown with a novel business idea; I am interested to see how this litigation pans out!
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