Legislation Would Insulate Joint-Employer Standard from Political Whim
- The House Education and Workforce Committee on Tuesday voted to send the American Franchise Act to the full House for consideration.
- The legislation would define the joint-employer standard as part of federal law and reduce franchisors’ liability for the labor infractions of their franchisees.
- Michael Layman of the International Franchise Association sees the American Franchise Act as vital for the preservation of the franchise business model.
- If the House passes the bill at some point after it returns from August recess, it also must be passed by the Senate. A companion bill already is pending in the Senate.
The American Franchise Act took a major step forward on Tuesday, when the House Education and Workforce Committee voted 23-18 to send it to the full U.S. House of Representatives for consideration. Michael Layman, chief advocacy officer of the International Franchise Association, sees the bill — introduced as H.R. 5267 — as crucial to the survival of the franchise business model.
The proposed legislation, which has some 140 bipartisan co-sponsors in the House, would, by federal law, define the joint-employer standard affecting franchisors and franchisees. At present, the standard is set by the National Labor Relations Board, which is made up of presidential appointees who are confirmed by the Senate. The joint-employer standard has changed four times during the last 10 years as control of the White House flips from one party to another.
Effects on Franchising
If passed, the bill would make it more difficult for franchisors to be held responsible for infractions regarding minimum wage requirements and collective bargaining obligations by their franchisees, Bloomberg noted in its reporting on Tuesday. The protective language would be added to the National Labor Relations Act and the Fair Labor Standards Act.
In a Tuesday evening telephone interview, Layman said the bill provides safeguards that benefit franchisees, too, by keeping their business models – and thus their livelihoods – healthy. “Franchising has been dealing with unnecessary joint-employer confusion for more than a decade,” Layman said. Previous changes in the standard already have harmed the business model, he stated.
Past Legislative Efforts
Earlier efforts to codify the joint-employer standard were part of broad legislation, which proved to be problematic, Layman says. He sees the current “narrower solution” of the American Franchise Act as more likely to pass. He pronounced today’s committee vote “the first very important step in the legislative process.”
Layman said organized labor battles legislative proposals to codify the joint-employer standard. “Labor nefariously wants to eliminate the franchise model,” he said. If the American Franchise Act fails, Layman said, it’s an existential threat to franchising. “But now there’s a broad-based coalition who care about the franchise model.”
Oklahoma Republican Rep. Kevin Hern introduced the bill in the House on Sept. 10, 2025, Congress.gov reports, and bipartisan co-sponsorship followed. The companion bill in the Senate was introduced by Kansas Republican Sen. Roger Marshall and Sen. Angus King, an independent who caucuses with Democrats.
The House could vote on the bill as early as September, when members of Congress return from August recess. Assuming it passes the House, Senate approval will be required.
Ongoing IFA Support
Layman says the IFA won’t take its foot off the gas as the bill moves ahead in Congress. A key point of outreach is the Coalition to Save Local Businesses website, he says. The website does a deep dive on the American Franchise Act and encourages supporters to spread the word on social media.
IFA has made public opinion part of its push in favor of the American Franchise Act. For instance, a recently released IFA poll found more than 70% of Americans support franchises and protections for the business model. One noteworthy statistic: 72% of Americans say they prefer to patronize brands that expand through franchising versus corporate chains.
And Oxford Economics’ Value of Franchising report, commissioned by the IFA and released in January of this year, emphasizes franchising benefits such as:
- Franchises support career growth for Americans.
- Franchises offer business ownership opportunities (64% of franchisees are first-time business owners).
- Franchise business owners give back to their communities.
Additional IFA research from February of this year underscored franchising as a powerful force within the U.S. economy. That report determined approximately 832,000 franchise establishments operate in the United States. Those businesses generate $907 billion in annual economic output (the value of goods and services sold or provided) and support 8.8 million jobs.
