American Franchise Act

This bill sets a clear rule for franchise businesses about when a brand company (the franchisor) is legally responsible as an employer for workers at a local franchise location. It says the franchisor counts as a “joint employer” only if it actually uses strong, hands-on control over key parts of a worker’s job—like pay, hours, hiring or firing, discipline, and supervision. The same standard would apply under federal wage-and-hour law, so the rule is consistent across labor and pay laws. The bill’s findings also stress that franchisees are independent owners who run day-to-day operations, while franchisors set brand and quality standards to keep things consistent for customers. It would not affect any cases that started before the bill becomes law.

Key points

• Who is affected: franchisors, franchisees, and workers at franchise locations.
• What changes: a franchisor is only a joint employer if it has and uses substantial, direct, and immediate control over core job terms like wages, hours, hiring and firing, discipline, and supervision.
• Where this applies: under national labor law and federal wage-and-hour law, using the same joint-employer test in both.
• When: applies going forward; it does not apply to cases filed before the law takes effect.