“To preserve the franchise business model.”
No CRS summary available for this bill.
This section states congressional findings on the franchise business model, recognizing (1) franchises as independent businesses using a franchisor’s operational system, trademarks, and marketing plan; (2) franchisors’ need to enforce uniform quality standards to maintain brand consistency and value; (3) franchisees’ control over day-to-day operations and labor relations; (4) franchises’ 2022 U.S. economic output of $825 billion and employment of 8.4 million workers (5% of the workforce); and (5) the adverse effects of inconsistent joint employer liability standards on franchising.
This section amends the National Labor Relations Act (NLRA) and the Fair Labor Standards Act of 1938 (FLSA) to establish that a franchisor is a joint employer of a franchisee's employees only if the franchisor possesses and exercises substantial direct and immediate control—meaning regular or continuous consequential effect, not sporadic or de minimis—over one or more essential terms and conditions of employment (i.e., wages, benefits, hours of work, hiring, discharge, discipline, supervision, and direction). Direct and immediate control requires the franchisor to actually determine wage rates or salaries, select benefit plans or levels, set individual work schedules or overtime, decide on particular hires or discharges, impose discipline, consistently instruct on how to perform work or issue appraisals, or assign individual tasks, positions, or schedules; it excludes brand standards, operating hours, minimum staffing or performance levels for safety or brand protection, routine instructions on what/where/when to work, training materials or requirements, or arm's-length participation in franchisor benefit plans. (Thus, standard franchise agreements typically do not trigger joint employer status under NLRA or FLSA, limiting franchisor liability for franchisee labor violations and union obligations.)