Bill Would End the Regulatory Whiplash, Protect Jobs and Keep the American Dream Alive 

WASHINGTON, DC – Today, the Coalition to Save Local Businesses (CSLB), a group of local small business owners, franchise brands, and industry associations, applauded the U.S. House of Representatives’ introduction of the American Franchise Act, bipartisan legislation to bring clarity and fairness to the rules governing franchise businesses. This historic legislation would unleash opportunity and investment in every corner of the country by protecting the franchise business model that supports over 830,000 small businesses and 8.8 million jobs, generating $900 billion annually in economic activity. 

 “The American Franchise Act is a commonsense solution that strengthens small businesses, protects workers, and keeps local economies strong,” said Erica Farage, spokesperson for the Coalition to Save Local Businesses. “Congress must act now to put an end to this regulatory roller coaster for local franchises with a clear joint employer standard. We are grateful to the bipartisan cosponsors for introducing this narrow legislative solution. Codifying this joint employer definition into law will protect local businesses, preserve jobs, and keep the American Dream within reach for millions of hard-working entrepreneurs and workers alike.” 

For decades, franchising has been a trusted pathway to the American Dream, especially for women, people of color, and immigrants who often face barriers to starting independent businesses. From family-run restaurants and gyms to neighborhood salons, pet care, and home services, franchises are local businesses run by people invested in their communities. 

Introduced today in the U.S. House of Representatives by Reps. Mark Alford (R-Mo.), Ami Bera (D-Calif.), Jim Costa (D-Calif.), Henry Cuellar (D-Texas), Don Davis (D-N.C.), Chuck Edwards (R-N.C.), Adam Gray (D-Calif.), Vicente Gonzalez (D-Texas), Kevin Hern (R-Okla.), Ryan Mackenzie (R-Pa.), Nathaniel Moran (R-Texas), August Pfluger (R-Texas), Hillary Scholten (D-Mich.), and Beth Van Duyne (R-Texas), the bipartisan bill would codify the joint employer standard in the franchise context that determines when two entities share responsibility for the same employees. The joint employer standard has changed four times over the past 10 years, with every change in power in the White House. The implementation of the 2015 standard drove up legal costs by 93% and cost an estimated 376,000 American jobs.  

The lack of a clear law governing the joint employer standard has put local entrepreneurs at risk of losing their independence as business owners and the equity they have built in their businesses, caused confusion for employees, and damaged the relationship between franchisors and franchisees. Further, another pending lawsuit threatens to change the standard once again. The American Franchise Act would put an end to the regulatory whiplash and give business owners the certainty they need to invest and grow confidently. 

Franchisees from across the country agree: 

“Local franchisees like me benefit from a strong brand reputation and a vast network of resources designed to drive growth and profitability,” said Wes Snyder, a FASTSIGNS franchisee in Arizona. “I am so proud of the employee team we’ve created and the careers they have built. Everything I have accomplished in my life is a direct result of the franchise model, and we need to protect it.” 

"The support a franchise provides helped me take my business to the next level," said Jeff Davis, a Jani-King franchisee in Virginia. "I would not be as successful in my business without the proven franchise model. I am so thankful for what franchising has provided my family and me over the last 17 years." 

"Franchising is a powerful model for business growth in hundreds of industries, providing business ownership opportunities to individuals who may not have the opportunity otherwise,” said Randy Cross, a Fish Window Cleaning franchisee in Michigan. “The benefits of franchising are undeniable for local owners, brands, employees, and communities, and the American Franchise Act will unlock opportunities for even more aspirational Americans across the country.” 

The American Franchise Act will amend the Fair Labor Standards Act and the National Labor Relations Act’s joint-employer provisions, aligning the law with historical precedent prior to 2015 and the current National Labor Relations Board policy. It will recognize the reality that franchisees are independent small businesses, and franchisors are only joint employers when they possess and exercise “substantial and immediate control” over one or more essential terms or conditions of a franchisee’s employees.  

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The Coalition to Save Local Businesses is an initiative of the American Hotel and Lodging Association, the Health and Fitness Association, the International Franchise Association, the International Salon and Spa Business Network, the International Spa Association, the National Restaurant Association, NATSO: Representing America's Travel Centers and Truck Stops, the Professional Beauty Association, SIGMA: America's Leading Fuel Marketers, and the Small Business and Entrepreneurship Council. Together, they are united in support of a transparent joint employer standard that reaffirms the independence of local franchise owners. Learn more at https://savelocalbusinesses.com/.