Washington, D.C. — A new Center for American Progress analysis examines the proposed American Franchise Act in Congress, legislation that would allow large corporations to dictate how millions of Americans work while avoiding responsibility when workers are illegally underpaid or mistreated. The bill would strip key protections from nearly 9 million franchise workers and shift legal and financial risk onto small business owners.
The legislation would narrow when corporations can be held responsible for workplace conditions at franchise locations. In practice, it would allow franchisors to influence hiring, staffing, and workplace policies while avoiding liability. This would make it much harder to hold large corporations accountable for wage theft, violations of workers’ rights, or child labor laws, even when their policies create those outcomes.
“Without strong joint-employer protections, workers will be vulnerable to wage theft and violations of their rights, and small business owners will have less control over decisions affecting their businesses,” said Karla Walter, senior fellow at the Center for American Progress and author of the analysis. “Congress should not be creating new ways for corporations to avoid responsibility while workers and small businesses are left holding the bag.”
The analysis highlights several key findings:
- The bill would strip protections from millions of workers. The American Franchise Act would weaken joint-employer standards that currently protect nearly 9 million franchise workers nationwide, leaving them more vulnerable to wage theft and labor violations.
- Small businesses would bear the full legal burden. The owners of more than 800,000 franchise locations could be held solely liable for workplace violations, even when corporate franchisors hold significant control over operations and employment conditions.
- Corporations could control workplaces without accountability. The legislation would allow franchisors to influence hiring, staffing levels, and workplace policies while avoiding legal responsibility for labor law violations.
- Weak enforcement would enable labor abuses. Without strong joint-employer standards, likely only the most blatant violations would be penalized, allowing systemic issues such as wage theft and union busting to persist.
- Evidence shows risks are real and growing. Research cited in the report finds that wage theft among fast-food workers in Los Angeles tripled between 2009 and 2024, costing workers tens of millions of dollars annually.
Joint-employer protections have existed for more than 90 years and are embedded across federal labor laws governing wages, workplace safety, antidiscrimination, and collective bargaining. These protections reflect the reality that large corporations often hold significant control over working conditions even when they are not the direct employer. Without accountability, workers will be vulnerable to wage theft and violations of their rights, and small business owners will have less control over decisions affecting their businesses.
Read the analysis: “The American Franchise Act Would Harm Workers and Small Businesses” by Karla Walter.
For more information or to speak with an expert, please contact Christian Unkenholz at [email protected].