It’s common to hear complaints about politics and politicians, and often for good reason. People get tired of the gridlock and partisanship.
But when elected officials do the right thing, they deserve credit, too. Right now, there is something special brewing in both Jefferson City and Washington, D.C. – especially for those of us in the franchise community.
After a decade of regulatory ping pong, our leaders (in the State House and U.S. Capitol) are working hard to bring certainty to an issue called “joint employer.”
Joint employer defines the relationship between franchisors—brands providing systems and support—and franchisees like me, who replicate the original idea, run the day-to-day operations and everything else that goes into small business ownership. Think of joint employer as the rules of the road.
When joint employer rules are clear and narrow, focusing on “direct” control over essential terms like hiring, firing, and pay, the independence that makes franchising thrive is preserved and protected. Franchisees are free to invest, innovate, and hire without fear of meddling from a corporate overlord.
When joint employer rules are expanded to include “indirect” or even “reserved” control, the autonomy and independence between franchisors and franchisees break down. The system collapses, and workers, consumers and entrepreneurs pay the price. The last era of federal expanded joint employer cost franchised businesses $33.3 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits.
Perhaps even worse than the wrong standard is the uncertainty that comes with a constantly changing set of rules. In recent years, joint employer has shifted faster than a roller coaster.
In 2023 under the Biden Administration, the National Labor Relations Board (NLRB) expanded the definition of joint employer. Thankfully, a federal court in Texas vacated that rule in March 2024, reinstating the narrower 2020 standard after business groups, including the International Franchise Association (IFA), challenged it.
That doesn’t mean the wrong version is gone forever. An NLRB under a future president could decide to change it back on a whim.
As long as the threat lingers, businesses suffer. That’s where our courageous elected officials enter the picture.
In Missouri, a group of lawmakers led by Rep. Matthew Overcast are moving forward with HB 1644, which clarifies that a franchisor is not considered an employer of a franchisee’s workers unless it directly and immediately controls core employment decisions. It establishes the appropriate clear and narrow rules of the road.
If it becomes law (the bill recently passed the Missouri House of Representatives), our state will become the twenty-second state to codify a state joint employer protection. In addition to IFA, the effort enjoys support from leading business organizations, including the American Hotel & Lodging Association, Missouri Lodging Association, and the Missouri Chamber of Commerce.
Meanwhile, at the federal level, a bipartisan group of elected officials in both chambers are working together on the American Franchise Act (AFA). Intentionally streamlined and narrow, the AFA also codifies into law the appropriate joint employer standard.
The AFA applies only to franchisors and franchisees. It does not impact a company like Amazon or others in the “gig economy” that rely on independent contractors. It also does not prevent franchisors from being defined as joint employers should they meet the threshold of “direct” employment.
It was drafted this way to attract a broad, bipartisan base of support – a move that is already paying off. Right now, there are nearly 80 co-sponsors of the AFA in the U.S. House of Representatives. The Senate version also enjoys cross-party appeal.
Both the state bill and federal effort define the rules of the road, now and into the future. That’s all the business community wants from their elected leaders. Making the business succeed is our job. We just need a stable environment. Thanks to the efforts of Rep. Overcast in Jefferson City and Missouri U.S. Reps. Mark Alford and Robert Onder in Washington, D.C., we’re on our way. Let’s hope others jump on board and turn these commonsense bills into meaningful laws.
Missouri’s 16,600 franchise small business owners are watching closely.
Co-founder of Keyser Enterprises, he operates more than 50 multi-franchise operations throughout the Midwest with his brother
