HR 5267: American Franchise Act

HR 5267 in plain English: The American Franchise Act would establish federal rules governing the franchise business relationship in the United States. The franchise sector generates approximately $825 billion in output and employs approximately 5 percent of all U.S. workers.

Stated purpose

The bill aims to preserve the franchise business model by clarifying in federal labor law when a franchisor can and cannot be considered a 'joint employer' of a franchisee's workers.

Key points

• Establishes federal rules for franchise business relationships
• The U.S. franchise sector produces approximately $825 billion in annual output
• Franchises employ approximately 5 percent of all U.S. workers

Arguments supporters make

• Protecting franchisors from broad joint employer liability keeps the franchise model viable, preserving millions of jobs and hundreds of billions in economic output.
• Franchisors need to set quality and safety standards without those standards being used to make them liable as employers — this bill draws a clear, workable line.
• Small-business franchisees benefit from clearer rules that confirm they, not the parent brand, are the employers responsible for managing their own staff.

Arguments opponents make

• Workers at franchise locations may be left without a meaningful remedy against the deep-pocketed franchisor when franchisee owners lack the resources to pay for labor violations.
• The bill could allow franchisors to exercise significant practical influence over working conditions — like setting staffing levels — while escaping legal accountability for those decisions.
• Narrowing joint employer liability tips the balance of power further toward large franchise corporations and away from workers seeking to organize or address wage and labor abuses.

Tradeoffs

Making it easier for franchisors to avoid joint employer liability helps protect a large and economically significant business model, but may reduce workers' ability to hold the most financially powerful party accountable for labor violations at franchise locations.

Current status in Congress: In committee.

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