- AFA heads to House floor after committee vote.
- AHLA, IFA welcome committee approval.
- House approval would send bill to Senate.
THE AMERICAN FRANCHISE Act, H.R. 5267, cleared the U.S. House Committee on Education and Workforce on an 18 to 15 party-line vote on July 21. The bill now heads to the House floor, where lawmakers are expected to consider it after the August recess.
The bill would establish a federal joint-employer standard for franchising under the National Labor Relations Act and the Fair Labor Standards Act.
Under the bill, a franchiser is a joint employer only if it exercises substantial, direct and immediate control over a franchisee's essential employment terms, including wages, benefits, hours, hiring, discipline, supervision and direction. It would apply only to franchising and codify the National Labor Relations Board's 2020 joint-employer standard, under which franchisers and franchisees are separate entities unless the franchisor directly controls employment decisions.
"We must protect this industry and its workers from massive pendulum swings of joint-employment standards," Rep. James Moylan of Guam said during the committee meeting. "The American Franchise Act reinforces this independence by clarifying that franchisors and franchisees are joint employers only if they directly control the essential employment matters."
Rep. Kevin Hern of Oklahoma introduced the bill in September 2025. The bill has more than 140 bipartisan House co-sponsors. Sens. Roger Marshall of Kansas and Angus King of Maine introduced a companion bill in the Senate. Supporters argue the legislation would provide clarity, while opponents contend it would weaken workers' rights.
If enacted, the bill would make it harder to hold franchisors liable for franchisees' violations of minimum wage and collective bargaining laws, according to Bloomberg Law. It would amend the National Labor Relations Act and the Fair Labor Standards Act.
Protecting franchise businesses
The joint-employer standard has changed four times in the past decade, according to testimony submitted to the House Committee on Education and Workforce. The NLRB expanded franchiser liability in 2023, but a federal court struck down the rule. The NLRB reaffirmed the 2020 rule in February.
"Franchising is the backbone of the American hotel industry and a true path toward achieving the American dream," said Rosanna Maietta, American Hotel & Lodging Association president and CEO. "For tens of thousands of hoteliers, franchising is the most accessible pathway to building a small business in America. Franchised hotels support more than 2.8 million jobs, account for nearly 60 percent of all U.S. hotels, and generate nearly $100 billion in annual economic impact."
In May, AHLA urged Congress to pass the AFA, citing franchising regulations, staffing shortages and rising operating costs as challenges facing the U.S. hospitality industry.
"The AFA has passed the House Education & Workforce Committee," Matthew Haller, International Franchise Association president and CEO, wrote on LinkedIn. "On to the floor next! Thanks to the incredible International Franchise Association team, our more than 100 national and state coalition partners, and every franchisor, franchisee and supplier who has helped advocate to date! Now it's time to show up in force in September for the IFA Advocacy Summit in D.C.!"
In December, IFA led a coalition of more than 100 business, advocacy and diversity groups, including AAHOA, AHLA and the U.S. Travel Association, in urging Congress to support the bipartisan AFA.
"We are grateful to Chairman Tim Walberg and members of the committee for recognizing the need to preserve and strengthen this important pathway to entrepreneurship," Maietta said. "The AFA would provide essential clarity and protection to reinforce the franchise relationship and guard against regulatory overreach that threatens the stability of this time-tested model. We look forward to this legislation advancing to the House floor and urge Congress to swiftly pass it."
Different voices
Rep. Virginia Foxx of Virginia said the bill would protect independently owned franchise businesses.
"Holding franchisers responsible for employment decisions they do not control discourages investment, raises costs and makes expansion more difficult for franchise owners," she said, according to Franchise Times.
Committee Democrats opposed the bill. Ranking member Rep. Bobby Scott of Virginia said it would narrow the joint-employer standard and weaken workers' ability to enforce their rights under federal labor laws.
"It could leave franchisees responsible for employment practices influenced by franchisers," he said.
Scott proposed two amendments during the committee markup, Franchise Times reported. One would have allowed direct or indirect control to determine joint-employer status. The other would have allowed franchisees to seek damages from franchisers for liability resulting from franchisor policies or guidance.
Rep. Suzanne Bonamici of Oregon supported the second amendment.
"Franchisees who comply with franchiser requirements should not bear sole responsibility for resulting labor violations," she said. "Both amendments were rejected on party-line votes."
IFA research released in February found about 832,000 franchise establishments operate in the U.S., generating $907 billion in annual economic output and supporting 8.8 million jobs.
If the House approves the bill, it will move to the Senate.
