September 10, 2025
National Restaurant Association Supports Joint Employer Definition Codified by the American Franchise Act
The bipartisan legislation preserves the franchise business model and empowers entrepreneurs in the restaurant industry
Washington, D.C. – The decade-long fight over the definition of a “joint employer” is one step closer to an end, following the introduction of the American Franchise Act today in the U.S. House of Representatives. The National Restaurant Association supports the move to codify a “direct and immediate” joint employer standard that would provide clear and stable guidance for franchised restaurants while protecting the integrity of the franchise business model.
Small business owners operate nearly a quarter of a million franchised restaurants in communities across the country and employ more than four million people. Franchising is a vital business model because it often makes starting a restaurant more economically feasible for individuals with dreams of being a part of the industry and owning their own business.
The local owner hires staff, organizes scheduled, manages payroll, and oversees daily operational tasks. The joint employer standard helps business owners understand how a franchisor and a franchisee are responsible for the operation of the business.
The American Franchise Act would make it easier for these restaurant owners to determine their responsibilities as an employer by amending the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA) to clarify that: “A franchisor may be considered a joint employer of the employees of a franchisee only if the franchisor possesses and exercises substantial direct and immediate control over one or more essential terms or conditions of the employees of the franchisee.”
The American Franchise Act affirms that while franchisors set uniform standards to protect their brand and ensure consistency, franchisors and franchisees remain independent businesses.
“Restaurants are the cornerstone of the American economy and a vital source of employment. In the last decade, the ‘joint employer’ standard has changed four times—the constant regulatory whiplash leaving restaurant owners confused and apprehensive,” said Sean Kennedy, executive vice president for Public Affairs for the National Restaurant Association. “American Franchise Act creates a clear ‘joint employer’ standard based on direct and immediate control of the conditions of their workforce’s employment. This permanent definition would encourage entrepreneurship and stimulate economic growth in communities across the country.”
For more than a decade, the Association and the Restaurant Law Center (RLC) have been fighting to protect the long-established direct and immediate “joint employer” standard as the National Labor Relations Board (NLRB) worked to expand the scope of what is considered “essential terms and conditions of employment.” These changes have often dramatically increased the liability risks of the franchisor-franchisee relationship, as well as service providers and third-party companies. As a result, a restaurant operator could be held jointly liable for labor violations committed by an entity with which they have a business relationship.
Learn more about the Association and RLC legal efforts here.
Small business owners operate nearly a quarter of a million franchised restaurants in communities across the country and employ more than four million people. Franchising is a vital business model because it often makes starting a restaurant more economically feasible for individuals with dreams of being a part of the industry and owning their own business.
The local owner hires staff, organizes scheduled, manages payroll, and oversees daily operational tasks. The joint employer standard helps business owners understand how a franchisor and a franchisee are responsible for the operation of the business.
The American Franchise Act would make it easier for these restaurant owners to determine their responsibilities as an employer by amending the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA) to clarify that: “A franchisor may be considered a joint employer of the employees of a franchisee only if the franchisor possesses and exercises substantial direct and immediate control over one or more essential terms or conditions of the employees of the franchisee.”
The American Franchise Act affirms that while franchisors set uniform standards to protect their brand and ensure consistency, franchisors and franchisees remain independent businesses.
“Restaurants are the cornerstone of the American economy and a vital source of employment. In the last decade, the ‘joint employer’ standard has changed four times—the constant regulatory whiplash leaving restaurant owners confused and apprehensive,” said Sean Kennedy, executive vice president for Public Affairs for the National Restaurant Association. “American Franchise Act creates a clear ‘joint employer’ standard based on direct and immediate control of the conditions of their workforce’s employment. This permanent definition would encourage entrepreneurship and stimulate economic growth in communities across the country.”
For more than a decade, the Association and the Restaurant Law Center (RLC) have been fighting to protect the long-established direct and immediate “joint employer” standard as the National Labor Relations Board (NLRB) worked to expand the scope of what is considered “essential terms and conditions of employment.” These changes have often dramatically increased the liability risks of the franchisor-franchisee relationship, as well as service providers and third-party companies. As a result, a restaurant operator could be held jointly liable for labor violations committed by an entity with which they have a business relationship.
Learn more about the Association and RLC legal efforts here.
About the National Restaurant Association
Founded in 1919, the National Restaurant Association is the leading business association for the restaurant industry, which comprises more than 1 million restaurant and foodservice outlets and a workforce of 15.7 million employees. Together with 52 State Associations, we are a network of professional organizations dedicated to serving every restaurant through advocacy, education, and food safety. We sponsor the industry's largest trade show (National Restaurant Association Show); leading food safety training and certification program (ServSafe); unique career-building high school program (the NRAEF's ProStart). For more information, visit Restaurant.org and find @WeRRestaurants on Twitter, Facebook and YouTube.