Congress should pass the American Franchise Act because the law should recognize the business that actually employs the worker; preserve the independence of the owner who actually runs it; and hold a franchisor responsible when — and only when — it crosses the line.
The progressive argument starts with a true statement: franchisors can have enormous commercial influence. Then it makes the leap that influence is employment. That leap is the problem.
Congress has a legitimate reason to provide a franchise-specific rule rather than leave owners, workers, courts, and regulators to chase a standard that changes with the agency, the statute, the circuit, or the election cycle.
A franchise-specific rule is justified because standards, training, inspections, software, operating requirements, and trademark controls are inherent to franchising.
In franchising, not knowing about the Lanham Act or understanding its purpose and requirements is potentially catastrophic. The Lanham Act is the foundation upon which franchising is built and without it, the franchise license we give to our franchisees would have little validity.
The AFA is proposed federal legislation designed to do one thing: establish in statute a clear legal definition of the franchise relationship that protects franchisors from being classified as joint employers of their franchisees and their franchisees’ employees.
The expert’s function is not to manufacture opinions to fit a narrative, but to explain and contextualize the facts, serving as a translator between the realities of the business and the legal forum in which the dispute is being resolved.
The American Franchise Act (AFA) is a singularly important bill to clarify the meaning of joint employment. In the past ten years the definition of joint employment has changed four times, causing significant damage not only to franchisees and franchisor but to the American consumer, workers, and our economy.
The Federal Trade Commission recently announced a new rule that will ban employers from imposing non-compete clauses on their workers – but the new rule will not prohibit non-compete provisions between franchisors and franchisees.
In its 2007 update, the Commission eliminated the requirement that FSOs and brokers provide material disclosure to the potential franchisees they are working with. While removing that information from a franchisor’s FDD was a sensible decision, eliminating it entirely leaves prospective franchisees in significant jeopardy.
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