,,ii #aaith ,,congress #ast ,session ,s4 #cebe ,,in ,,the ,,senate ,,of ,,the ,,united ,,states ,december #ag1 #bjbe ,mr4 ,marshall 7for himself1 ,mr4 ,king1 ,mr4 ,lankford1 ,mr4 ,sheehy1 and ,ms4 ,collins7 introduced the following bill2 which was read twice and referred to the ,committee on ,health1 ,education1 ,labor1 and ,pensions ,a ,,bill ,to preserve the franchise business model4 #a4 ,short title ,this ,act may be cited as the ,american ,franchise ,act4 #b4 ,findings ,congress finds the following3 7#a7 ,a franchise is a commercial relationship under which a franchisee acquires the right to operate an independent business that offers1 sells1 or distributes goods or services using a franchisor's system of operations1 which typically includes the franchisor's business system and marketing plan1 and its service mark1 trademark1 trade dress1 or trade name4 7#b7 ,to protect the integrity of its system of operations1 a franchisor must set and enforce uniform quality1 marketing1 and operational standards that govern its use4 ,doing so helps maintain consistency and uniformity in the nature and quality of the goods and services distributed under the franchisor's trademarks4 ,that consistency and uniformity1 in turn1 help ensure that consumer expectations are satisfied1 increase the value of the franchisor's brand1 and enhance the recognition and profitability of individual franchises4 7#c7 ,although franchisees must comply with these standards1 franchisees are independent business owners4 ,it is the franchisee who determines how to implement the franchisor's standards1 controlling on a day-to-day basis the operations of its franchise and its labor relations4 7#d7 ,the economic impact of this business model has been profound4 ,according to a ,september #bjbc report from ,oxford ,economics1 in #bjbb1 the economic output of franchise establishments in the ,united ,states was approximately #hbe1jjj1jjj1jjj4 ,during that year1 franchises employed approximately #e percent of all workers in the ,united ,states1 which was approximately #h1djj1jjj workers4 7#e7 ,inconsistent 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 appropriate levels of control that is inherent in franchise relationships4 #c4 ,clarification of joint employment for franchising 7a7 ,national ,labor ,relations ,act ,the ,national ,labor ,relations ,act 7#bi ,u4,s4,c4 #aea et seq47 is amended by adding at the end the following3 #bj4 ,clarification of joint employment for franchising 7a7 ,definitions ,in this section3 7#a7 ,direct and immediate control ,the term direct and immediate control means the following with respect to each respective essential term and condition of employment3 7,a7 ,wages ,a franchisor exercises direct and immediate control over wages if it actually determines the wage rates1 salary1 or other rate of pay that is paid to individual employees of a franchisee or job classifications of employees of a franchisee4 7,b7 ,benefits ,a franchisor exercises direct and immediate control over benefits if it actually determines the fringe benefits to be provided or offered to a franchisee's employees4 ,such direct and immediate control does not include permitting a franchisee1 under an arm's-length contract1 to participate in a benefits plan of the franchisor 7such as a health insurance plan1 pension plan1 or tuition assistance74 7,c7 ,hours of work ,a franchisor exercises direct and immediate control over hours of work if it actually determines work schedules or the work hours1 including overtime1 of a franchisee's employees4 ,such direct and immediate control does not include-- 7i7 establishing a franchisee's operating hours2 or 7ii7 establishing minimum staffing levels to satisfy the franchise's service standards4 7,d7 ,hiring ,a franchisor exercises direct and immediate control over hiring if it actually determines which particular employees will be hired or which employees will not be hired4 ,such direct and immediate control does not include-- 7i7 encouraging or recommending changes in staffing levels2 or 7ii7 setting minimal recruiting and hiring standards1 such as those required by law1 for consumer or employee safety1 or for brand protection4 7,e7 ,discharge ,a franchisor exercises direct and immediate control over discharge if it actually decides to terminate the employment of an employee of a franchisee4 ,such direct and immediate control does not include-- 7i7 bringing misconduct or poor performance to the attention of a franchisee that makes the actual discharge decision2 7ii7 expressing a negative opinion of a franchisee's employee2 or 7iii7 setting minimal standards of performance or conduct1 such as those required by law1 for consumer or employee safety1 or for brand protection4 7,f7 ,discipline ,a franchisor exercises direct and immediate control over discipline if it actually decides to suspend or otherwise discipline a franchisee's employee4 ,such direct and immediate control does not include-- 7i7 bringing misconduct or poor performance to the attention of a franchisee that makes the actual disciplinary decision2 7ii7 expressing a negative opinion of a franchisee's employee2 or 7iii7 setting minimal standards of performance or conduct1 such as those required by law1 for consumer or employee safety or for brand protection4 7,g7 ,supervision ,a franchisor exercises direct and immediate control over supervision by consistently and directly instructing a franchisee's employees how to perform their work or by actually issuing employee performance appraisals4 ,such direct and immediate control does not include-- 7i7 providing instructions to a franchisee's employees that are limited and routine2 7ii7 setting brand standards for the performance of the work2 7iii7 offering training materials 7including training demonstrations7 for a franchisee to use to train the employees of the franchisee2 7iv7 establishing minimum training requirements for the employees of a franchisee2 or 7v7 providing operational support1 guidance1 and assistance to the franchisee to promote and protect the brand's goodwill and quality of products and services provided to the consumer4 7,h7 ,direction ,a franchisor exercises direct and immediate control over direction by assigning particular employees of a franchisee their individual work schedules1 positions1 and tasks4 ,such direct and immediate control does not include offering resources and tools for a franchisee to consider using to direct the work schedules1 positions1 and tasks of the employees of the franchisee4 7#b7 ,essential terms and conditions of employment ,the term essential terms and conditions of employment means wages1 benefits1 hours of work1 hiring1 discharge1 discipline1 supervision1 and direction4 7#c7 ,franchise2 franchisee2 franchisor ,the terms franchise1 franchisee1 and franchisor-- 7,a7 have the meanings given such terms in section #dcf4a of title #af1 ,code of ,federal ,regulations1 as in effect on the date of enactment of this section2 and 7,b7 notwithstanding subparagraph 7,a71 include a franchise1 franchisee1 and franchisor1 respectively1 as defined in section #aja of the ,petroleum ,marketing ,practices ,act 7#ae ,u4,s4,c4 #bhja74 7#d7 ,substantial direct and immediate control ,the term substantial direct and immediate control-- 7,a7 means direct and immediate control that has a regular or continuous consequential effect on an essential term and condition of employment of a franchisee's employees2 and 7,b7 does not include direct and immediate control that is only exercised on a sporadic1 isolated1 or de minimis basis4 7b7 ,joint employment ,for the purposes of this ,act1 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 and conditions of employment of the employees of the franchisee4 4 7b7 ,fair ,labor ,standards ,act of #aich ,the ,fair ,labor ,standards ,act of #aich 7#bi ,u4,s4,c4 #bja et seq47 is amended by adding at the end of the following3 #bj4 ,clarification of joint employment for franchising 7a7 ,in general ,for purposes of this ,act1 a franchisor may be considered a joint employer of the employees of a franchisee only if the franchisor meets the criteria for a joint employer with a franchisee under section #bj of the ,national ,labor ,relations ,act1 except that1 for purposes of determining joint-employer status under this ,act1 the terms employee and employer referenced in section #bj of the ,national ,labor ,relations ,act shall have the meanings given such terms in section #c of this ,act4 7b7 ,definitions ,in this section1 the terms franchisor and franchisee have the meanings given such terms in section #bj7;a7 of the ,national ,labor ,relations ,act4 4 #d4 ,applicability ,this ,act1 and the amendments made by this ,act1 shall not apply to any proceeding that is commenced before the date of enactment of this ,act4