IFA urges Department of Labor to adopt its proposed joint employer rule with IFA’s recommended clarifications, hailing it as a win for franchised businesses by providing certainty under the Fair Labor Standards Act

WASHINGTON, D.C. – The International Franchise Association (IFA), through its IFA Law Center, submitted comments responding to the U.S. Department of Labor (DOL) Notice of Proposed Rulemaking (NPRM) regarding joint employer status, a regulation essential to the operation of the franchise business model.

In its comments, which are available here, IFA outlined its support for the proposed rule’s core provisions providing clarity and predictability for the franchise business model, including:

• Stating that the nature of the franchising relationship does not, by itself, indicate joint employment.
• Reaffirming the “economic realities” framework for determining joint employment, centered on four core factors (power to hire/fire, supervise/control work schedules or conditions of employment, determine rate/method of pay, and maintain employment records).
• Recognizing concrete examples illustrating permissible franchisor-franchisee interactions, such as brand standards enforcement, training resources, and compliance guidance.
• Clarifying that contractual requirements for legal compliance, health/safety standards, and quality control do not indicate joint employment.

“On behalf of America’s thousands of franchise brands and more than 800,000 franchise locations, IFA applauds Acting Secretary Keith Sonderling for this balanced joint employer rule that aligns with precedent, protects the franchise model, and benefits small business owners, workers, and consumers alike,” said Matt Haller, IFA President & CEO. “This rulemaking brings essential stability for business owners, reducing frivolous litigation risks while encouraging the support and resources franchisors provide to help franchisees thrive. Once implemented, this Rule will help unleash opportunity, upward mobility and strengthen the franchise model as a cornerstone of the American economy.”

IFA also recommends targeted revisions to further strengthen the rule, including:

• Clear statements that the mere reservation of contractual rights or indirect/unexercised control, standing alone, does not establish joint employment.
• Clarification that franchise relationships do not create the type of “economic dependence” relevant to joint employment analysis.
• Additional concrete examples of franchisor support activities (e.g., providing proprietary technology/tools, sample HR policies, staffing recommendations, and data sharing) that do not create joint employer liability.
• Affirmation that premises ownership or leasing in a landlord-tenant relationship is neutral absent direct control over employment terms.

IFA was joined by dozens of franchisors and franchisees from the more than 300 industries prevalent in franchising in commenting on the Rule, with each stressing the essential nature of stability and the uniqueness of the franchise relationship.

“A clear rule allows us to continue providing the critical operational support our franchisees request, protecting local jobs and the autonomy of the independent entrepreneurs who drive our brand forward,” wrote Jim Howe, president of FASTSIGNS, in their comments in support of the rule while requesting additional clarity.

Clint Ehlers, a FASTSIGNS franchisee echoed the sentiment saying, “A clear rule will help preserve the independence of franchise owners like me, while allowing franchisors to keep providing the training, support, technology, and guidance that help local businesses succeed and create jobs in their communities. As the owner of two FASTSIGNS centers employing approximately a dozen people across Pennsylvania and New Jersey, I know firsthand how important it is to maintain that balance between franchisee independence and franchisor support.”

To protect this commonsense joint employer standard for the long-term, IFA is asking Congress to pass the bipartisan American Franchise Act (AFA). The bill would codify that direct control of narrowly defined essential terms and conditions of employment for joint employer status is necessary for a joint employment finding between franchisors and franchisees. This legislation would ensure that future Administrations are prevented from implementing an expanded, harmful standard .

The American Franchise Act has 128 bipartisan cosponsors in the U.S. House of Representatives and companion legislation has been introduced in the U.S. Senate.

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About the International Franchise Association:

Celebrating over 65 years of excellence, education, and advocacy, the International Franchise Association (IFA) is the world’s oldest and largest organization representing franchising worldwide. IFA works through its government relations and public policy, media relations, and educational programs to protect, enhance and promote franchising and the more than 832,000 franchise establishments that support nearly 8.8 million direct jobs, $907.3 billion of economic output for the U.S. economy, and almost 3 percent of the Gross Domestic Product (GDP). IFA members include franchise companies in over 300 different business format categories, individual franchisees, and companies that support the industry in marketing, law, technology, and business development.