How the American Franchise Act Would Settle the Joint Employer Fight
For nearly a decade, American franchise law has been stuck on a basic question: when a worker is paid by a franchisee, could the corporate brand behind that franchise also be treated as the employer? The answer has changed multiple times since 2015, leaving franchisors, franchisees, and employees uncertain about who holds legal responsibility for wages and working conditions.
The American Franchise Act is a direct attempt to end that uncertainty. Introduced in September 2025 by a bipartisan group of seven Republicans and seven Democrats, the bill creates a single, franchise-specific joint-employer standard under the Fair Labor Standards Act and the National Labor Relations Act.
Why the Standard Keeps Moving
Since 2015, regulators and courts have shifted the test for joint employment four times. Each change redefined how much control a franchisor must exercise over a franchisee's operations before being held accountable for the same employees. The result, as supporters describe it, is regulatory whiplash: businesses cannot predict whether a corporate parent will be pulled into labor disputes or whether a franchisee will bear the full load alone.
For workers, the instability matters because the standard determines who can be held liable when paychecks fall short of federal requirements or when workplace rights are violated.
What the Bill Would Do
The bill's central innovation is its franchise-specific focus. Rather than applying a generic joint-employer test across all business models, it establishes a single standard tailored to the franchise relationship. That standard would apply consistently whether claims are brought under wage-and-hour law or federal labor relations law.
The available summaries do not spell out exactly how much control triggers joint-employer status. The distinction between direct control, reserved contractual authority, and practical influence would be resolved in the legislative text and later interpretation.
The White House Weighs In
The legislation has drawn support from the administration. In remarks reported by Franchising.com, Vince Haley, director of the White House Domestic Policy Council, said the Trump Administration fully supports the bill and that "no matter what happens this year, we have to get it done this year."
The statement stops short of detailing a specific policy outcome, but it signals that the administration regards a stable franchise employment standard as a priority.
What Is at Stake
Backers point to more than 832,000 franchise small businesses in the United States, supporting about 9 million jobs. Franchising is often treated as a path into business ownership for people who might not otherwise start a company, which is why the bill's supporters connect it to economic mobility.
If the measure becomes law, the immediate benefit would be predictability. Franchisors would understand their exposure, franchisees would understand their independent responsibilities, and workers would know which entity to hold to account.
The exact contents of the standard remain the final unknown. Until the bill passes, the answer to who truly employs a franchise worker will keep shifting.