No. If enacted, the American Franchise Act (AFA) would not affect workers’ ability to hold franchisors or franchisees accountable for illegal or illicit activities. The AFA adds clarifying language regarding situations in which a franchisor may be held jointly liable under the Fair Labor Standards Act (FLSA) and National Labor Relations Act (NLRA).

A franchisor may be considered a joint employer only if it possesses and exercises substantial direct and immediate control over one or more essential terms and conditions of employment of the employees of a franchisee.

• Preserves accountability: A franchisor may still be jointly liable when it actually determines essential terms and conditions of employment of a franchisee’s employees, like wage rates, benefits provided, work schedules and disciplinary action. The bill does not change the protections, remedies or enforcement mechanisms of the NLRA or the FLSA; it addresses only when a franchisor is one of the employers subject to them.

• Protects franchisee independence: Franchisees operate independently, hiring their teams and running their businesses day to day. Day-to-day employee management remains the sole prerogative of the independent franchisee.

• Clarifies brand standards and support: Setting minimum standards for brand protection, including protection of the franchisor’s trademarks and intellectual property, and offering training materials or other operations resources do not amount to direct and immediate control.

• Source: https://www.franchise.org/advocacy/american-franchise-act/
• Source: https://savelocalbusinesses.com/wp-content/uploads/2026/07/CSLB-AFA-Myth-vs-Fact.pdf