H.R. 5267 — American Franchise Act

This section states congressional findings that a franchise is a commercial relationship in which franchisees operate independent businesses under a franchisor’s system and trademarks while complying with uniform standards; that franchisees control day-to-day operations and labor relations; that franchises produced $825 billion in economic output and employed 8.4 million workers in 2022; and that inconsistent joint employer standards create liability based on franchisor control inherent to the model.

This section limits joint employer liability under the National Labor Relations Act and the Fair Labor Standards Act by providing that a franchisor may be considered a joint employer of a franchisee’s employees only if it exercises substantial direct and immediate control over one or more essential terms and conditions of employment. It defines direct and immediate control for wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction, and specifies that substantial control requires a regular or continuous consequential effect rather than sporadic or de minimis actions.