Franchising Is America’s Entrepreneurial Ladder — If We Keep the Rungs in Place

This is the fourth in a 4-part series. Part One describes the American Franchise Act, Part Two details why brand standards are not employment decisions, and Part Three examines the progressive case against franchising.

The final case for passage is not about protecting a corporate form. It is about preserving a practical route into ownership.”

Franchising is not a guarantee of success. It is a system that gives people a better-prepared place to begin — and then requires them to own the result.

Franchising is not a perfect business model. No business model is. Concepts fail, markets change, and franchisees make bad decisions. Franchisors sometimes expand too quickly, underinvest in support, or sell an opportunity that was not ready to be sold.

But judged as a system of business formation, franchising has done something important: it has given people who did not invent a product, build a trademark, or design an operating system a practical route into business ownership.

I have watched employees become managers, managers become franchisees, and franchisees become multi-unit owners. That path is not automatic, and it is not available in every system. It exists often enough to matter.

What the numbers show — and what they do not

The IFA’s 2026 outlook projects approximately 845,000 franchised establishments and nearly 8.9 million franchise jobs. It projects $921.4 billion in economic output for the year.[1] These figures describe scale, not virtue. A large industry can still need reform — but Congress should understand the size of the system before changing the legal assumptions on which it operates.

A separate 2026 report commissioned by the IFA and conducted by Oxford Economics used a survey of nearly 3,000 franchisees together with payroll data. It reported that 82% of franchisees own only one location, 85% live and work in the communities they serve, 64% are first-time business owners, and 30% say they would not own a business without franchising.[2] Because the research is industry-sponsored, its methodology and claims of course should be examined for accuracy, but the findings nevertheless challenge the caricature that the franchise economy consists mainly of national corporations operating through disposable local managers.

Most franchise owners do not spend their days thinking about doctrine. They think about payroll, customer complaints, rent, staffing, debt service, local competition, and whether the next location is a good idea or an expensive mistake. That is what ownership looks like in practice.

Support and independence belong together

The attraction of franchising is the combination of support and responsibility. The franchisee receives a brand, an operating system, training, purchasing arrangements, technology, marketing, and the accumulated experience of a network. In return, the franchisee invests capital, follows the system, manages the local business, and accepts the consequences of performance.

Critics sometimes describe that combination as contradictory. It is not. Independence does not require isolation. An owner can be independent while using a licensed system, borrowing from a bank, leasing property, buying from approved suppliers, and meeting contractual standards. The question is whether the owner controls the business decisions assigned to the owner — including the employment relationship. When the answer is yes, the law should respect it. When the franchisor actually takes those decisions over, the law should follow the facts and impose the corresponding responsibility.

Worker protection does not require fictional ownership

The American Franchise Act does not repeal minimum-wage obligations, overtime rules, collective bargaining rights, anti-discrimination laws, workplace-safety requirements, or state employment protections.[3] It addresses when a franchisor is added as a joint employer under the NLRA and FLSA. The franchisee remains the employer, and remains accountable for compliance. The franchisor can also be accountable when it possesses and exercises the substantial, direct, and immediate control described by the bill.[4]

That distinction should be stated carefully. The bill can affect which defendants workers may pursue, and which parties must bargain. It therefore has real consequences. The case for passage is not that the bill changes nothing. The case is that employer liability should be tied to employer conduct rather than inferred from the existence of a franchise relationship.

Part of entrepreneurship is accountability. The owner who makes the decision should answer for it. Reassigning that responsibility to a national brand whenever the brand has commercial influence may produce a larger defendant, but it also tells the local owner that ownership is legally conditional and perhaps not very real.

The cost of getting the rule wrong

Legal uncertainty changes behavior. When ordinary training, field support, compliance assistance, or technology can be characterized as evidence of employment, franchisors are encouraged to reduce contact. Lawyers advise caution. Operations teams learn to stop one sentence short of being useful. Franchisees receive less help precisely where a mature system should be able to help them most.

The same uncertainty affects investment. A prospective franchisee, lender, or franchisor making a long-term capital decision needs to know which party owns which responsibilities. Rules that shift with agency composition or turn on vague notions of economic influence make those decisions harder and more expensive.

No one should claim that passage of the American Franchise Act will, by itself, create a wave of new businesses or eliminate the risk of joint employment. Legislation rarely works that neatly. What it can do is remove an avoidable source of uncertainty, and preserve the operating distinction that allows a national brand and a local owner to work together without becoming the same employer by default.

The choice before Congress

Congress does not have to decide whether every franchise system is good. It has to decide whether responsibility under two major federal labor statutes should follow substantial, exercised authority over employment decisions, or a broader and less predictable theory of commercial influence.

The American Franchise Act chooses authority. It says a franchisor that actually acts as an employer can be treated as one. It also says that a franchisor does not become an employer merely by protecting the brand, offering tools, training the system, or holding an independent owner to the standards the owner agreed to meet.

This is the right balance. It protects the integrity of the employment laws without dismantling the legal distinction that makes franchise ownership possible.

America does not have too many business owners — it has too few. Franchising will not solve every problem of economic mobility, and no responsible person should promise that it will. It remains however one of the most practical ways for a person to enter ownership with an established system behind them.

Congress should pass the American Franchise Act. Not because franchisors deserve a favor, and not because franchisees should be relieved of responsibility. Congress should pass it 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 actually crosses that line.

This is the fourth in a 4-part series. Part One describes the American Franchise Act, Part Two details why brand standards are not employment decisions, and Part Three examines the progressive case against franchising.

Michael Seid is Managing Director of MSA Worldwide. You can reach him at mseid@msaworldwide.com or 860-523-4257.

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[1]  International Franchise Association, 2026 Franchising Economic Outlook.

[2]  International Franchise Association, “Value of Franchising” (report conducted by Oxford Economics, released Jan. 7, 2026). IFA states that the report draws on a 2025 survey of nearly 3,000 franchisees and payroll data supplied by Paychex; FRANdata supplied the single-location figure.

[3]  See, e.g., National Labor Relations Act, 29 U.S.C. §§ 151–169; Fair Labor Standards Act, 29 U.S.C. §§ 201–219; Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e to 2000e-17; Occupational Safety and Health Act, 29 U.S.C. §§ 651–678.

[4]  Amendment in the Nature of a Substitute to H.R. 5267, § 3(a)–(b) (July 17, 2026). The bill would add a franchise-specific joint-employer provision to the NLRA and apply the same criteria under the FLSA.