U.S. Senators Roger Marshall, M.D. (R-Kansas) and Angus King (I-Maine) this week introduced the American Franchise Act—a bipartisan bill that clarifies the joint employer standard and reshapes the franchising industry.
For a decade, joint employer rules have shifted between administrations, creating ambiguity and confusion for businesses. This bill offers clarity and stability by establishing a clear and practical definition of the joint employer standard.
The American Franchise Act codifies joint employment standards by defining the essential terms and conditions of employment, which include wages, benefits, hours of work, hiring, discharge, discipline, supervision and direction. It sets the legal standard for what would make two businesses both be considered the employer of an employee under the National Labor Relations Act and the Fair Labor Standards Act.
“The American Franchise Act marks the end of uncertainty when it comes to the joint employer standard,” said Senator Marshall. “With clear guidelines, entrepreneurs can feel empowered to venture into the franchise model and live out their American dream of owning a business.”
“Franchises are a proven pathway to entrepreneurship, especially for first-time small business owners, and contribute to local economies nationwide,” said Senator King. “The American Franchise Act strikes the right balance between protecting workers and preserving the independence of local business owners. This legislation clarifies federal law and strengthens economic opportunity without undermining the franchise model that supports millions of American jobs.”
“We appreciate the work of Senators Marshall and King to finally bring common sense to this area of employment law,” said Doug Kantor, general counsel, NACS. “Independent franchise businesses, including branded fuel retailers, need to know they can operate without taking on unreasonable liability for someone else’s labor issues. The American Franchise Act will bring common sense to this area of the law and allow independent businesses across the nation to flourish.”
The legislation is co-sponsored by Senators James Lankford (R-Oklahoma), Tim Sheehy (R-Montana) and Susan Collins (R-Maine).