Joint-employer law and American Franchise Act may affect Taco Bell; sources silent

Rep. Kevin Hern introduced H.R. 5267, the American Franchise Act, on Sept. 10, 2025 with Democratic co-lead Rep. Don Davis, proposing a federal standard that would define when a franchisor can be treated as a joint employer of a franchisee’s workers. The measure identifies a single test centered on whether a franchisor “possesses and exercises substantial direct and immediate control over one or more essential terms or conditions of employment,” language that the International Franchise Association framed as the bill’s core clarification.

The AFA’s proposed standard appears across industry and legal summaries as tied to the National Labor Relations Board’s 2020 approach. Grassiadvisors summarized the proposal this way: “Under the proposal, a franchisor would be considered a joint employer only if it exercises ‘direct and immediate’ control over essential terms and conditions of employment. These may include decisions related to wages, hours, hiring, discipline or supervision.” Franchise/IFA materials repeat the statutory formulation verbatim: “A franchisor may be considered a joint employer of the employees of a franchisee only if the franchisor possesses and exercises substantial direct and immediate control over one or more essential terms or conditions of employment.”

At the same time, the supplied excerpts disagree about which federal statutes the AFA would amend. Saul’s legal analysis by Alexander L. Reich and Mark Nehme describes the bill as amending the NLRA and framing the 2020 NLRB rule’s “substantial direct and immediate control” test. Franchise/IFA material says the AFA “modestly amends the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA) to clarify” the joint‑employer standard. Goldlawgroup characterizes the bill as aiming to codify — not expand — the current joint‑employer standard, saying, “The American Franchise Act does not seek to change the current joint employer standard as it applies to franchising, but instead to codify it.”

Supporters named in the supplied materials include Rep. Hern and the International Franchise Association. Rep. Hern is quoted, “As one of the few franchisees in Congress, I understand how damaging an ever-changing joint-employer rule is to the franchise business model.” The Hern materials also include numeric claims that “This has resulted in 376,000 lost job opportunities and a 93% spike in costly litigation.” IFA President and CEO Matt Haller appears in the supplied excerpt praising the bill’s protection for franchisees and citing “America’s 831,000 franchise small businesses,” though that quote is truncated in the material provided.

The legal context in the supplied excerpts stresses shifting standards: Saul notes that the joint-employer test “determines when two separate entities are both considered legal ‘employers’ of a particular employee, thereby sharing liability,” and links that outcome to the degree of control exercised over workers. Grassiadvisors and Franchise/IFA emphasize that routine brand preservation activities would not alone establish joint-employer liability, with Grassiadvisors stating, “tasks such as establishing brand standards, providing training materials, or offering operational guidance would not alone create joint-employer liability.”

None of the supplied excerpts mention Taco Bell, any specific franchised restaurant brand, or include statements from franchisors, franchisee associations, unions, or worker advocates. The materials supplied to this report frame the AFA as pending federal legislation tied to H.R. 5267 and as backed by industry voices, while leaving open how the measure would play out for individual brands, franchisees, and restaurant workers if Congress enacts the changes.