American Franchise Act

The American Franchise Act (H.R. 5267) would tighten and formalize how “joint employer” liability is determined between franchisors and the employees of their franchisees under the National Labor Relations Act (NLRA) and the Fair Labor Standards Act (FLSA). The core change is a precise, enumerated standard called “direct and immediate control.” A franchisor would be considered a joint employer only if it actually exerts substantial direct and immediate control over one or more essential terms and conditions of a franchisee’s employees’ work, such as wages, hours, hiring, discharge, discipline, and supervision. The bill also sets out what counts as direct and immediate control and what does not, aiming to prevent broad, geography-wide liability for franchisors that oversee a franchise system without micromanaging individual workers. The measure explicitly states it does not apply to proceedings begun before enactment. The bill would align NLRA and FLSA joint-employer standards with a narrow, control-based test and would define franchisor/franchisee through existing regulatory definitions. It emphasizes the franchise model’s value and seeks to reduce uncertainty and liability for franchisors while preserving a framework for worker protections where a franchisor genuinely exercises substantial control over employment terms.