American Franchise Act

This section establishes the official short title of the bill as the "American Franchise Act," providing a common and easily recognizable name for the legislation.

This section outlines Congress's findings regarding the franchise business model, defining a franchise, explaining the necessity of franchisor standards for brand integrity, asserting franchisees' independence as business owners, detailing the economic impact of franchising in the U.S., and noting the negative impact of "inconsistent and expansive views of what constitutes a 'joint employer'" on franchising viability.

This section adds a new Section 20 to the National Labor Relations Act, defining "direct and immediate control" for essential terms and conditions of employment (wages, benefits, hours, hiring, discharge, discipline, supervision, and direction). It specifies what actions by a franchisor do and do not constitute such control. Crucially, it states that a franchisor is a joint employer only if it possesses and exercises "substantial direct and immediate control" over one or more of these essential terms.

This section adds a new Section 20 to the Fair Labor Standards Act of 1938, stipulating that a franchisor may be considered a joint employer of a franchisee's employees only if it meets the criteria established in the amended National Labor Relations Act (NLRA) section. It clarifies that the terms "employee" and "employer" under FLSA will retain their FLSA meanings when applying the NLRA's joint employer criteria.

This section specifies that the Act and its amendments will only apply to legal proceedings that commence after the date of its enactment. It explicitly excludes any proceedings initiated before this date from being affected by the new joint employer definitions.