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Bill

HR 5267

American Franchise Act

119th Congress Introduced by Robert Aderholt and 123 co-sponsors

The American Franchise Act clarifies franchisor-franchisee relationships, protecting franchisors from joint employer liability and ensuring franchisee operational independence.

Introduced in House
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WeVote Research Nonpartisan
Bill Summary · HR 5267

Summary of HR 5267: American Franchise Act

Bill Number: HR 5267
Introduced: September 10, 2025
Status: Introduced in House
Committee: Referred to the House Committee on Education and Workforce

Purpose and Intent

The American Franchise Act aims to preserve and clarify the franchise business model in the United States. The bill seeks to address concerns regarding the classification of franchisors and franchisees under labor laws, particularly in relation to joint employer liability. By doing so, it intends to protect the integrity of franchise operations and ensure the continued economic viability of the franchise system.

Key Provisions

Findings

The bill outlines several findings regarding the franchise business model:
1. Definition of Franchising: A franchise is defined as a commercial relationship where a franchisee operates an independent business using the franchisor's system, including trademarks and operational standards.
2. Importance of Standards: Franchisors must enforce uniform quality and operational standards to maintain brand consistency and consumer satisfaction.
3. Economic Impact: Franchises contribute significantly to the economy, generating approximately $825 billion in economic output and employing about 8.4 million workers in the U.S. as of 2022.
4. Joint Employer Liability: The bill highlights that inconsistent interpretations of "joint employer" status have negatively affected franchising.

Clarification of Joint Employment

The bill proposes amendments to the National Labor Relations Act to clarify the concept of joint employment specifically for franchising. Key definitions include:
- Direct and Immediate Control: The bill specifies what constitutes direct control by a franchisor over various employment conditions, such as wages, benefits, hours of work, hiring, discharge, discipline, and supervision.
- Limitations on Control: It emphasizes that franchisors do not exercise direct control when they merely set brand standards or provide training materials, thereby protecting franchisees' autonomy in managing their businesses.

Impact

Who Would Be Affected

  • Franchisors: The bill aims to protect franchisors from being classified as joint employers, thereby reducing potential liabilities.
  • Franchisees: Franchisees would benefit from clearer definitions of their operational independence and reduced risk of joint employer claims.
  • Employees: The bill may influence the employment conditions of approximately 8.4 million workers employed by franchises, as it clarifies the roles and responsibilities of franchisors and franchisees.

Procedural Aspects

  • The bill was introduced and referred to the House Committee on Education and Workforce on September 10, 2025.
  • As of now, it is in the early stages of the legislative process, pending further discussion and potential amendments.

Conclusion

The American Franchise Act seeks to reinforce the franchise business model by clarifying the relationship between franchisors and franchisees, particularly regarding employment law. By addressing the complexities of joint employer liability, the bill aims to foster a more stable and predictable environment for franchise operations in the United States.

Compiled from official sources — confirm details with the bill’s official record.

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