The American Franchise Act (AFA) is bipartisan, bicameral legislation that establish a single, franchise-specific joint employer standard under the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA).

The bills, H.R. 5267 and S. 3525, would provide a clear, durable standard that protects franchisee independence while allowing franchisors to provide brand standards, training, tools, and support without fear of the risk of joint employer liability.

• Establishes a clear and certain joint employer standard: Under the American Franchise Act, a franchisor could be considered a joint employer of a franchisee’s employees only if the franchisor “possesses and exercises substantial direct and immediate control” over one or more essential terms and conditions of employment of those employees. The bill would give franchisors and franchisees greater certainty about where the legal line sits.

• Creates a durable federal rule: After decades of shifting, the AFA would codify a statutory test for determining when a franchisor may be treated as a joint employer of a franchisee’s employees. It would replace a shifting regulatory landscape with a durable federal standard consistent with historical precedent and the NLRB’s current joint employer rule.

• Protects the franchise business model: Franchising depends on a clear division of responsibility: franchisors provide the brand, systems, training, and operational support, while franchisees own and run the day-to-day business and independently hire employees. A predictable joint-employer standard allows franchisors to support local owners without undermining franchisee independence and allows franchisees to remain the employer of the individuals they hire and manage.

• Applies specifically to the franchise relationship. The legislation only applies to the franchise relationship, not other business models. It addresses joint-employer determinations involving franchisors and franchisees under the FLSA and NLRA. It does not provide franchisors blanket immunity from joint-employer findings; rather, it establishes a substantial direct-and-immediate-control test for making that determination.

• Has broad bipartisan support: The American Franchise Act was introduced in the House in September 2025 by a bipartisan group of seven Republicans and seven Democrats, led by Rep. Kevin Hern (R-Okla.) and U.S. Rep. Don Davis (D-N.C.). In July, the House Education and Workforce Committee approved H.R. 5267 and now heads to the House floor for consideration. Its Senate companion, S. 3525, was introduced in December 2025 by Sen. Roger Marshall (R-Kan.) and Sen. Angus King (I-ME), joined by Sens. Susan Collins (R-Maine), James Lankford (R-Okla.) and Tim Sheehy (R-Mont.). As of September 8, 2026, the House bill has 158 bipartisan cosponsors, and the legislation is supported by major franchisee organizations as well as more than 100 state and local business, diversity, and industry groups.

• Source: https://www.franchise.org/advocacy/american-franchise-act/
• Source: https://www.franchise.org/wp-content/uploads/2026/05/AFA-Backgrounder-2026.pdf
• Source: https://www.franchise.org/2026/07/ifa-applauds-committee-passage-of-american-franchise-act/
• Source: https://www.congress.gov/bill/119th-congress/house-bill/5267/cosponsors?s=1&r=1