Govind Tekale
The Trump administration has signalled support for the American Franchise Act, a bill that would write a specific joint-employer definition for franchise businesses into federal law. The signal came at the International Franchise Association's Advocacy Summit, where White House Domestic Policy Council Director Vince Haley publicly said the administration fully supports H.R. 5267.
The bill in question is H.R. 5267. It would codify a traditional joint-employer standard specifically for the franchise sector, requiring a more direct level of control before a franchisor can be held jointly liable as an employer alongside a franchisee.
The bill is not yet law. Congressional support and White House backing do not by themselves make legislation effective. H.R. 5267 still needs to pass both chambers of Congress and receive a presidential signature to become law.
What Joint Employer Status Actually Means for Franchises
Joint-employer status determines who can be held legally responsible for employment conditions — wages, scheduling, working conditions — at a franchise location.
Under a broader joint-employer standard, a franchisor can potentially be held liable for employment conditions at individually owned franchise locations even if it doesn't directly supervise the day-to-day workforce. Under a narrower standard, joint-employer status attaches only when the franchisor exercises direct and immediate control over wages, benefits, hours of work, hiring and other terms of employment.
The joint-employer definition has shifted multiple times under different administrations. The National Labor Relations Board issued a broader joint-employer rule in 2023, which courts and Congress subsequently contested. H.R. 5267 would establish a statutory joint-employer standard for franchising through legislation, rather than leaving it solely to agency rulemaking, making it harder for a future administration to change the standard through regulatory action alone.
Supporters of the bill argue that the narrower standard would reduce potential joint-employer exposure for franchise businesses. Opponents argue that a narrower standard could limit the legal pathways available to franchise workers to hold parent brands accountable for employment conditions at individual locations.
The IFA, which represents franchisors and franchisees, has lobbied for the bill. The administration's expressed support at the IFA summit was welcomed by IFA members, though it does not change the bill's legislative calendar.
For context on how the joint-employer rule has changed under different administrations and what it has meant for franchise businesses in practice, the history of NLRB rulemaking since 2014 is directly relevant. Franchise owners and workers both have reason to track the bill's congressional progress closely.
What would the American Franchise Act change?
The bill would establish a statutory joint-employer standard specifically for franchises. Under its terms, a franchisor could only be held jointly liable as an employer if it exercises direct and immediate control over wages, benefits, hours, hiring and other employment conditions. The bill is intended to prevent future administrations from widening the joint-employer definition through regulatory rulemaking without congressional action.
