American Franchise Act—Shielding Franchisors From the NLRB’s Joint Employer Whipsaw

American Franchise Act—Shielding Franchisors From the NLRB’s Joint Employer Whipsaw

Labor Relations | Union Avoidance | Joint Employer Standard · July 24, 2026

Bottom line for employers: On Tuesday, the House Committee on Education and the Workforce advanced the American Franchise Act (H.R. 5267) on a party-line 18–15 vote. The bill would write a narrow joint employer test directly into the National Labor Relations Act—requiring “substantial, direct, and immediate control” over a franchisee’s workers before a franchisor can be forced to the bargaining table or held liable for a franchisee’s unfair labor practices. For any brand that wants to stay union-free, this is the standard that matters. It is a real win. It is also one committee vote at the start of a long road, so plan around the Board that governs today—not the statute you hope arrives.

What the Committee Did

On Tuesday, July 21, 2026, the House Committee on Education and the Workforce voted 18–15 to advance the American Franchise Act, sponsored by Rep. Kevin Hern (R-Okla.) and carrying 142 cosponsors. The vote fell strictly along party lines—every Republican in favor, every Democrat opposed—and two amendments offered by Ranking Member Bobby Scott were rejected on the same split. The bill was one of a slate of measures the Committee advanced that day and now heads toward a vote on the House floor.

Why the NLRB Keeps Moving the Line

The NLRA does not define “joint employer.” That silence has handed the question to the National Labor Relations Board, which has redrawn the line roughly four times in a decade—each swing tracking the party that controls the White House. The Obama Board’s 2015 Browning-Ferris decision blew the standard open, holding that a company could be a joint employer based on indirect or even unexercised, reserved control. The 2020 Trump Board pulled it back to “substantial, direct, and immediate control.” The Biden Board’s 2023 rule tried to reopen it before a federal court in Texas vacated that rule in 2024. For a franchisor, whether the Board treats you as the employer of thousands of workers you don’t manage has depended less on your franchise agreement than on who is running the NLRB that year.

What the Bill Changes

The American Franchise Act codifies the Trump 2020 standard and puts it in the statute itself rather than in a regulation the next Board can rewrite. Under the bill, a franchisor is a joint employer under the NLRA only if it possesses and exercises substantial, direct, and immediate control over the essential terms and conditions of a franchisee’s employees: hiring, firing, discipline, supervision, direction, wages, benefits, and hours. Ordinary brand-standards enforcement, quality-control inspections, and operational support would not, on their own, make a franchisor the employer of its franchisees’ workforces. In short, Congress—not the sitting Board—would set the line, and it would set it where franchisors want it.

At Stake: Your Union-Free Status

The joint employer standard is a union’s favorite lever. Under an expansive standard, organizers don’t have to win store by store. They name the franchisor as a joint employer and use that status to drag the brand to the bargaining table for workers it never hired, to pin a single franchisee’s unfair labor practices on the entire system, and to convert a one-location dispute into a national corporate campaign against the brand.

That is the playbook run against major franchisors during the Browning-Ferris years. Codifying the tight, hands-on-control standard slams that door shut: if you don’t directly control the workforce, you are not the employer, and you cannot be conscripted into a franchisee’s labor fight.

What Employers Should Do Now

▪ Don’t bet your labor strategy on Congress. This is a committee vote, not a law. A party-line 18–15 count signals a difficult path in the full House and a near-certain 60-vote wall in the Senate. Plan around the Board’s standard that governs today, not the one you hope arrives.

▪ Audit how your field team actually operates. The 2020 “substantial, direct, and immediate control” test governs at the NLRB right now. Make sure your franchise agreements—and the way your field representatives behave in practice—keep you clear of direct control over hiring, firing, discipline, scheduling, and supervision. Conduct, not paperwork, is what the Board looks at.

▪ Keep franchisor and franchisee roles clean. Advisory brand support is fine; controlling the who, when, and how of a franchisee’s workforce invites joint employer findings and the bargaining obligations that follow. Draw the line clearly and train your field staff to respect it.

▪ Watch the language, not the headline. Whether “direct and immediate” survives amendment intact matters far more to your exposure than the fact of committee passage. A watered-down definition would leave the Board room to swing the standard back.

Current Status & What to Watch

The bill now awaits a vote on the House floor. Even if it clears the House, it faces a 60-vote threshold in the Senate that it does not currently have, so enactment this Congress is far from assured. For now, the operative NLRA standard remains the Board’s 2020 rule—protective of franchisors, but only as durable as the current Board’s majority. The moment control of the Board changes, so can your exposure.

Contact me if you want to pressure-test your franchise agreements, field-support practices, and union-avoidance posture against joint employer exposure before the standard shifts again.