Findings

Congress finds the following: (1) A franchise is a commercial relationship under which a franchisee acquires the right to operate an independent business that offers, sells, or distributes goods or services using a franchisor’s system of operations, which typically includes the franchisor’s business system and marketing plan, and its service mark, trademark, trade dress, or trade name. (2) To protect the integrity of its system of operations, a franchisor must set and enforce uniform quality, marketing, and operational standards that govern its use. Doing so helps maintain consistency and uniformity in the nature and quality of the goods and services distributed under the franchisor’s trademarks. That consistency and uniformity, in turn, help ensure that consumer expectations are satisfied, increase the value of the franchisor’s brand, and enhance the recognition and profitability of individual franchises. (3) Although franchisees must comply with these standards, franchisees are independent business owners. It is the franchisee who determines how to implement the franchisor’s standards, controlling on a day-to-day basis the operations of its franchise and its labor relations. (4) The economic impact of this business model has been profound. According to a September 2023 report from Oxford Economics, in 2022, the economic output of franchise establishments in the United States was approximately $825,000,000,000. During that year, franchises employed approximately 5 percent of all workers in the United States, which was approximately 8,400,000 workers. (5) Inconsistent and expansive views of what constitutes a joint employer have impacted the viability of franchising by creating joint employer liability based on the franchisor’s exercise of control that is inherent in franchise relationships.