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Congress·In Committee·3 months ago

Senate Bill Would Shield Franchise Brands From Labor Liability at Locally Owned Locations

Also known as: American Franchise Act

Legislative Progress

✓ Filed
Review
Senate
House
President

Impacts

Negative Impacts(1)
Union Member
Hurts
Mixed Impacts(1)
Small Business Owner
Neutral

Key Points

  • This bill says a big franchise brand (like a national fast-food chain) is usually not the employer of workers at locally owned franchise stores.
  • The brand would count as a worker’s employer only if it actually makes key job decisions like pay, benefits, schedules, hiring, firing, or discipline.
  • It says brand rules like store hours, product quality, training materials, and minimum staffing for service standards should not, by themselves, make the brand an employer.
  • For workers, it could make it harder to bring wage, overtime, or labor complaints against the national brand, pushing most cases toward the local franchise owner.
  • Supporters say it protects small franchise owners and keeps franchising stable; critics may say it reduces accountability for big brands that influence work conditions.
Labor EmploymentSmall BusinessConsumer ProtectionEconomy

Milestones

2 milestones2 actions
Dec 17, 2025Senate

Read twice and referred to the Committee on Health, Education, Labor, and Pensions.

Dec 17, 2025

Introduced in Senate

What Happens Next

Projected impacts based on AI analysis

Right after the date the bill is enacted

The new “shared employer” test starts being used for new cases after the bill becomes law.

For future disputes, brands are usually not treated as the employer unless they truly control big job decisions like pay, schedules, hiring, or firing in a strong, ongoing way. Older cases already in progress would keep the old rules.

Within a few months after enactment

Brands and local franchise owners update contracts, training, and policies to fit the new line between “brand standards” and “job control.”

You may see new language in franchise agreements and new instructions about who can set pay rates, schedules, and discipline rules. This can change how fast workplace complaints get resolved and who is responsible.

Over the first 1–3 years after enactment

Workers and employers test the new rule in real disputes about wages, overtime, scheduling, and organizing.

Some claims that used to include the brand may be thrown out unless the worker can show the brand truly made the key job decision. Over time, court and agency decisions would clarify what counts as “strong, ongoing” control.

Related News

4 articles
Bloomberg Law·6 months ago

Bipartisan Joint Employer Bill Offers Protection for Franchises

A bipartisan pair of lawmakers introduced legislation to largely shield franchises from joint employer liability, making it harder for fast-food giants like McDonald's and Wendy's to be deemed responsible for the minimum wage or collective bargaining obligations of local franchisees.

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Nation's Restaurant News·6 months ago

Congress introduces bipartisan American Franchise Act to end joint employer complications

The legislation would codify the legal definition of joint employer to absolve franchisors of much of the responsibility for franchisees' labor law compliance. It clarifies that franchisors are only joint employers if they 'share or codetermine' essential terms like wages and working hours.

C=
FranchiseWire·5 months ago

IFA Advocacy Summit Attendees Back American Franchise Act

Introduced by a bipartisan group of 14 lawmakers, the American Franchise Act (H.R. 5267) seeks to end a decade of 'regulatory whiplash' by establishing a permanent federal standard for joint employment that protects the independence of small business franchise owners.

CR+

Source Information

Document Type

Congressional Bill

Official Title

American Franchise Act

Bill NumberS 3525
Congress119th Congress
ChamberSenate
Latest ActionRead twice and referred to the Committee on Health, Education, Labor, and Pensions.

Sponsor

Cosponsors

(4)
R: 3I: 1

Analysis generated by AI. While we strive for accuracy, this should not be considered legal or professional advice. Always verify information with official government sources.