Joint employer policy matters because the franchise business model depends on a clear division of responsibility.

Franchisees operate independently, hiring their teams and running their businesses day to day, while franchisors provide brand consistency, training tools and support. When the standard shifts or is unclear, franchisors may hesitate to offer support, franchisees risk losing independence and equity in the businesses they have built, and growth can be discouraged.

• Protects independent franchise ownership: A clear joint employer standard helps preserve the independence of local franchise owners and the equity they have built in their businesses.

• Allows support without added liability: Franchisors must be able to provide brand standards, training materials and operational resources without automatically becoming responsible for employment decisions made by independent franchisees.

• Supports investment and job creation: A stable federal standard gives franchise businesses greater certainty to grow, reinvest in their businesses, and create opportunities for workers, emerging brands and prospective business owners.

• Preserves worker protections: A clear standard does not make franchisors immune from joint employer findings when they possess and exercise substantial direct and immediate control over essential terms and conditions of employment. The American Franchise Act also does not alter other tests of multiparty liability, including misclassification, single employer or agency claims.

• Source: https://www.franchise.org/advocacy/american-franchise-act/
• Source: https://www.franchise.org/wp-content/uploads/2026/05/AFA-Backgrounder-2026.pdf