By eliminating ongoing legal uncertainty, the AFA would encourage growth, investment, expansion and hiring across the franchising and small business sector.

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Year after year, public opinion polling shows that Americans feel more positively toward small businesses than any other institution in America, even ahead of the military and police.  

While politicians often profess support for small businesses, however, their deeds too often don’t match their words.  

The ongoing debate over the “Joint Employer Doctrine” offers a perfect current illustration.  

The Joint Employer Doctrine refers to an effort by the Obama and Biden administrations, at the behest of self-serving big labor bosses, to upend traditional employment law by holding multiple businesses responsible and legally liable for the same set of employees.  Employers with little or no authority to affect workers’ actual employment terms and conditions would suddenly find themselves targeted by lawsuits and union organizing campaigns.  

Accordingly, that effort sought to deem businesses like franchisors to be “employers” of workers they neither hire nor manage, based solely on even theoretical control.  

That undermines the very foundation of the small-business franchise model, which relies upon a clear division of responsibility:  Franchisors maintain brand standards while franchisees – typically local small business owners – control day-to-day employment decisions that actually affect the workers in question.  

Obviously, that upending of longstanding American law and economic policy constitutes a gift to plaintiff trial lawyers and high-income union bosses by allowing them to target deeper pockets in lawsuits and organizing campaigns.  As workers increasingly abandon union membership when offered the choice, thereby reducing unions’ ability to influence elections and hand workers’ membership dues over to leftist politicians who support them, they’re desperate to find new ways to maintain power and wealth.  

The new American Franchise Act (AFA) before Congress offers a welcome bipartisan opportunity to resolve that issue for the benefit of small businesses, workers and the broader U.S. economy.  

The AFA would settle the definition of “joint employer,” which has swung wildly in recent years depending upon which party controlled the White House and thus the National Labor Relations Board (NLRB), thereby creating instability and uncertainty for millions of workers and business owners.  Specifically, the AFA would amend federal law to establish a single, common-sense standard:  A franchisor is only a “joint employer” if it exercises “substantial, direct and immediate control” over essential terms of employment such as hiring, firing, wages, scheduling and supervision.  

By drawing that brighter line, the AFA would protect franchisees’ independence while allowing franchisors to provide umbrella branding, operational and marketing support that make franchising among the most successful pathways to entrepreneurship and small business growth in American history.  

That constitutes enormous progress.  Franchising encompasses approximately 850,000 small businesses, and supports tens of millions of jobs across the U.S., generating hundreds of billions of dollars in economic output.  Those aren’t abstract numbers, they represent real people like first-time business owners, veterans, daring entrepreneurs and workers getting their starts in local communities.  

Accordingly, by eliminating ongoing legal uncertainty, the AFA would encourage growth, investment, expansion and hiring across the franchising and small business sector.  When businesses operate under stable, predictable rules, they are more likely to grow.  Conversely, regulatory uncertainty like constantly redefining “joint employer” discourages job creation, chills risk-taking and raises small business costs.  

Importantly, the AFA would benefit workers themselves most of all.  

Contrary to critics who might mislabel reform as crudely “pro-business,” the AFA would strengthen accountability where it matters by ensuring that the entities actually making employment decisions – the franchisees – remain responsible for those decisions.  Simultaneously, it would prevent distant corporate “deep pocket” entities from being unfairly swept into legal liability or union organizing efforts for actions beyond their control.  That dynamic currently discourages them from offering more support, training and innovation that ultimately benefit workers themselves.  

Notably, the AFA also maintains bipartisan support.  

Introduced in the House of Representatives by Republican Representative Kevin Hearn (Oklahoma) and Democratic Representative Don Davis (North Carolina), the legislation has attracted a growing groundswell of support from both chambers of Congress.  Indeed, it has already secured dozens of co-sponsors and continues to add support, making it a rare instance of agreement in today’s politically polarized environment.  

With a narrowly divided Congress and a Trump Administration eager to achieve tangible economic progress, the AFA thus presents a golden opportunity.  Passing it would not only resolve unsustainable regulatory uncertainty, but also signal the commitment to federal policies that empower small businesses, protect workers and promote economic growth.  

Politicians love to claim that they support small business, and the AFA offers them an opportunity to put their proverbial money where their mouths are.  Congress should seize the moment, pass this bipartisan reform and ensure that the small business franchise system continues to thrive for generations to come.