As Congress returns to Washington facing a long to-do list, lawmakers would be wise to focus on common sense legislation that can not only pass in an election year but also meet the American people where they are. By a wide margin, voters want their elected leaders to focus on economic issues.
One solution staring legislators in the face is the bipartisan American Franchise Act (AFA). Simple and standalone, the AFA ends the whiplash around the federal joint employer standard, the key determining factor establishing the independence between a franchisor and franchisee.
Under an expanded joint employer standard, a franchisor can be held legally responsible for a franchisee’s employment practices and labor obligations — even though the franchisee is the employer. Under the more appropriate narrow standard, franchisors are liable only if they have direct and immediate control over their employees.
Franchising means local, but at scale. Independent owners building businesses in their own communities under an established brand name. Nearly 832,000 franchise establishments operate across 300 industries, employ almost 9 million people, and generate more than $900 billion in economic output. Unlike a corporate owned business, a worker can even work their way to up own the business one day.
According to IFA’s Value of Franchising report, 85 percent of franchisees live and work in the communities they serve, 82 percent own just one location, and franchisees purchase an average of 40 percent of their goods from other local businesses.
Anyone who grabbed a burger at McDonald’s or a haircut at Sport Clips or stayed at a Marriott this summer experienced franchising.
Business owners cannot plan around political cycles. They need durable and clear rules for the long haul. Under an expanded joint employer standard standard, franchisees face two untenable choices: surrender day-to-day autonomy and become middle managers for the franchisor, or watch the franchisor withdraw operational support to limit liability.
Both outcomes fail franchisees, workers, and consumers. The result is fewer local businesses, less competition, higher prices, and a loss of jobs.
The AFA ends this threat by codifying that a franchisor is a joint employer only when it exercises substantial direct and immediate control over essential terms and conditions of employment. It applies solely to the franchise relationship and does not rewrite joint-employer rules elsewhere such as independent contractors. It does not excuse bad actors; those who meet the standard should be treated as joint employers.
The cost of inaction is steep: delayed openings, stalled expansions, and missed opportunities for the next generation of entrepreneurs. Continued regulatory uncertainty means fewer pathways into ownership — especially for women and people of color who have found opportunity through the franchise model. In fact, one-third of franchisees say they would not own a business at all without it.
The AFA has already built a broad tent: more than 150 House cosponsors and support from more than 100 business, advocacy, and diversity organizations. Companion legislation sits in the U.S. Senate, and franchising has a friend in the White House in President Trump.
Small business remains one of the few areas of common ground in American life. In Gallup’s latest confidence-in-institutions survey, it again ranked at the top, with nearly 7 in 10 adults expressing a great deal or quite a lot of confidence — the only major institution that consistently earns majority trust and strong bipartisan support.
The next time a member of Congress says they are focused on the economy, ask them if they are supporting the American Franchise Act. It is a common-sense win for local businesses, workers, and communities, and it is there for the taking this fall.
Matt Haller is President and Chief Executive Officer of the International Franchise Association
