$33 billion later, franchising wants a permanent fix
Ten years of legal uncertainty has changed how franchisors operate. Here's what's at stake and what you can do about it.
Weekly Signals is the executive brief of What's Next in Franchising: three signals, two minutes, once a week, for leaders scaling home and commercial services franchises.
This week, Leighton sat down with Haider Murtaza, Senior Director of Federal Government Relations at the International Franchise Association. Haider has spent the last decade fighting one of the most consequential (and frequently misunderstood) issues in franchising: joint employer liability.
The rulebook has changed four times in ten years.
Before 2015, joint employer was simple: direct control over a franchisee's workers meant liability. No control, no liability. It was as simple as that.
Then the National Labor Relations Board (LRB) expanded it—indirect or even potential control became enough. Two years under that standard cost the industry an estimated:$33 billion, a 93% litigation spike, and 380,000 jobs uncreated.
The standard has since shifted back, but most brands are still operating like the worst-case version is coming. Because it might.
Franchisees are paying royalties for support their franchisor can't legally give.
A lot of what franchisors want to give franchisees, they've quietly shelved. Not because they don't want to offer it—because legal said no. Here's what joint employer exposure has taken off the table for many brands:
- Employee handbook support
- HR guidance and workplace standards
- Deep training involvement
- Reward and recognition programs for frontline workers
Franchisees don't always know why the support stops where it does. They find out at the moment they need it most. That gap (between what franchisors want to offer and what they can safely offer) is the real cost of a decade of regulatory whiplash.
📩 Need to bring your network up to speed on joint employer? We built a ready-to-use deck—present it at your next FAC meeting, pull slides as conversation starters, or use it to shape your own talking points. Download the Franchisor Talking Points Deck
Congress wants to hear from you, not the IFA.
The American Franchise Act would fix this permanently, codifying a clear, narrow standard into law that's franchise-specific, with 100+ bipartisan House cosponsors and a Senate companion bill.
Here's what Haider Murtaza, the IFA's own government relations director, said out loud: members of Congress don't want to hear from lobbyists. They want to hear from franchise owners in their district. A 90-second letter from someone running a real business moves the needle more than hours on Capitol Hill.
If this matters to your network, now is the time to say so. First, download the Talking Points Deck. Then head to franchise.org.
These weekly signals are a companion to the latest episode of What's Next in Franchising.
