The American Franchise Act (AFA) would  end a decade of instability in federal joint employer policy for the more than 832,000 franchise small businesses operating across the United States.

Since 2015, the federal joint employer standard has changed four times. This back-and-forth has created confusion, stifled franchisor support for franchisees and their employees, and discouraged franchise business growth.

The AFA would clarify the joint employer standard by providing that 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 a franchisee’s employees.

• Creates a permanent federal standard: The AFA would modestly amend the Fair Labor Standards Act (FLSA) and National Labor Relations Act (NLRA) to establish a clear joint employer framework for franchisors and franchisees.

• Prevents continued policy reversals: Legislation is the only way to ensure the federal joint employer standard as applied to franchise relationships does not continue to change with each new presidential administration or change in composition of the NLRB and DOL.

• Protects franchise independence and support: A stable federal standard would help franchisees continue to operate independently while allowing franchisors to provide brand consistency, training tools and support without unnecessary legal uncertainty.

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