Representative Kevin Hern (OK-01) introduced the American Franchise Act (AFA) today with Democrat co-lead Representative Don Davis (NC-01). The legislation provides stability for the franchise model of small business by aligning federal statute with longstanding precedent and National Labor Relations Board (NLRB) policy. 

“As one of the few franchisees in Congress, I understand how damaging an ever-changing joint-employer rule is to the franchise business model,” said Rep. Hern. “I'm pleased that we were able to come together in a bipartisan effort to create legislation that safeguards small businesses and individuals working to achieve the American Dream across the country.”

The AFA has the support of the International Franchise Association. 

“This legislation recognizes that franchisees are small businesses, and their independence must be protected by federal law,” said Matt Haller, IFA President and CEO. “The American Franchise Act allows franchisors to properly support their franchisees – who are often first-time business owners from all walks of life – without the fear of an overly broad joint employer standard undermining the unique benefits of the franchise relationship. On behalf of America’s 831,000 franchise small businesses, we are grateful that the decade-long uncertainty around joint employer policy can finally come to an end.”

In the past, ever-changing ‘joint employer’ rules have put franchise business owners on a regulatory rollercoaster, due to a fundamental misunderstanding of the franchise business model. This has resulted in 376,000 lost job opportunities and a 93% spike in costly litigation. 

The American Franchise Act would give small, family franchise businesses the certainty they need by clarifying that franchisors are only “joint employers” if they possess an exercise substantial and immediate control over essential terms and conditions of employment, like hiring workers, firing workers, setting wages, and disciplinary action. 

The AFA recognizes that while franchisors set and enforce uniform standards to protect their brand and ensure consistency, franchisors and franchisees remain independent employers.

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