American Franchise Act
Summary
The American Franchise Act aims to preserve the franchise business model by clarifying the definition of 'joint employer' under the National Labor Relations Act and the Fair Labor Standards Act. It seeks to protect franchisors from being held liable for the actions of their franchisees unless they exert 'substantial direct and immediate control' over essential terms and conditions of employment. The bill defines 'direct and immediate control' with specific examples related to wages, benefits, hours, hiring, discharge, discipline, supervision, and direction.
Expected Effects
This act would narrow the circumstances under which a franchisor can be considered a joint employer. This would likely reduce the legal risks and liabilities for franchisors. It could also potentially shift more control over labor practices to franchisees.
Potential Benefits
- Provides clarity and legal certainty for franchisors regarding joint employer status.
- Reduces potential legal liabilities for franchisors, encouraging franchise expansion.
- Supports the franchise business model, which contributes significantly to the US economy.
- May lead to increased investment and job creation within the franchise sector.
- Could foster innovation and competition within the franchise industry.
Most Benefited Areas:
Potential Disadvantages
- May weaken worker protections by limiting franchisor liability for labor violations by franchisees.
- Could lead to decreased wages, benefits, or worsening working conditions for some franchise employees.
- May exacerbate power imbalances between franchisors and franchisees.
- Could potentially shield franchisors from accountability for discriminatory practices by franchisees.
- May face opposition from labor unions and worker advocacy groups.
Most Disadvantaged Areas:
Constitutional Alignment
The bill's alignment with the Constitution is primarily related to Congress's power to regulate interstate commerce (Article I, Section 8, Clause 3). By clarifying the definition of 'joint employer' in the context of franchising, Congress is attempting to set the rules for economic activity that often crosses state lines. The bill does not appear to directly infringe upon any individual rights or liberties protected by the Bill of Rights.
Impact Assessment: Things You Care About ⓘ
This action has been evaluated across 19 key areas that matter to you. Scores range from 1 (highly disadvantageous) to 5 (highly beneficial).