Ever grab a smoothie after a workout from Smoothie King or return an Amazon purchase at a UPS store? Chances are, you patronized a franchise.
From Ace Hardware to Visiting Angels to College Hunks Hauling Junk, recognizable brands earn our money and trust. Behind them are regular Americans who started a business in their local community to express their passion, serve others, or gain financial freedom. Corporate brands—also called franchisors—work with these entrepreneurs to bring their American dream to life.
This symbiotic relationship, known as franchising, is a partnership that benefits both parties. Franchisors provide a turnkey blueprint for a successful business, from marketing to operational systems. Franchisees run independent businesses, making day-to-day decisions. One does not work for the other in the traditional employer-employee sense. The same is true for contractors and subcontractors, or staffing agencies.
These distinctions between business relationships and arrangements matter under our labor laws. What’s known as ”joint employment” occurs when two or more entities are both liable for a single worker’s terms and conditions of employment. There’s been a fight in Washington over changing the nature of franchising, staffing agenices, and even independent contracting relationships from partnerships to traditional employer–employee arrangements, to the detriment of all and the communities they serve. The good news is that the Trump Department of Labor planted a flag in the ground to protect these independent arrangements in its thoughtful proposed joint employer rule.
The public comment period just concluded, but from the over 200 submissions, many franchise owners clearly communicated that they are their own boss, not the franchisor. Federal policy should weigh in favor of protecting this distinction rather than increasing legal liabilities for franchisors over the day-to-day employment decisions of independent business owners—causing the whole model to crumble.
Home Helpers Home Care commended the Trump administration for the proposed rule because, in their words, “We are the brand. We are not the employer.” The Ohio-based franchisor has a network of nearly 400 independently owned and operated franchised agencies serving over 1,500 U.S. and Canadian communities. Their franchisees are local entrepreneurs who recruit, hire, train, credential, schedule, pay, discipline, and, if need be, fire their caregiver staff.
Standardization takes the guesswork out of business for entrepreneurs while protecting brand reputation, boosting quality control, and delivering consistent positive experiences for customers. Home Helpers Home Care explained that it provides training curricula, certification support, care education on sensitive issues, safety instruction, and continuing education materials—all to ensure seniors, new and expecting parents, people recovering from illness or surgery, and disabled individuals get safe care.
Run by Emma Dickonson, Home Helpers Home Care is a female-led franchise, like nearly a third of the nation’s franchises. Women find franchising a viable option to build fulfilling enterprises using proven business models, especially in industries in which they are naturally inclined, such as caregiving.
Staffing agencies and independent contracting models also work well for women seeking flexibility to work around other priorities, such as raising their children and caring for aging parents.
The lionshare of 14 million U.S. female-owned enterprises have no employees of their own. It is efficient for micro-enterprises and solo shops to contract out many services and business functions, such as marketing and communications or accounting and payroll. Others enlist the help of other workers for specific projects. Think of an event planner contracting servers for a wedding. Entrepreneurs have the flexibility to adjust those contracts based on their needs.
Contracting services with subcontractors or brands working with franchises are not joint employers of workers. Courts have batted this question, as have administrations. The previous Trump administration sought to clarify when joint-employer liability exists under the Fair Labor Standards Act (FLSA) with a four-factor balancing test and additional guidance. That rule focused on whether an entity actually exercised control over a worker, not merely on their potential to do so.
A federal court gutted much of the 2020 rule that year, and the Biden Department of Labor rescinded what was left in 2021. Instead, the DOL directed investigators to apply a broad “totality of the circumstances” approach, widening the scope of arrangements that would fall under joint-employer status.
Forcing franchisors and independent contractors to be joint employers exposes these businesses to costly new liability. To avoid the legal exposure, larger entities—potentially headquartered states away—would take over control of the minutiae of local businesses, robbing entrepreneurs of control over their business.
Imagine that a contractor has to intervene when a subcontractor wants to discipline a worker for drinking on the job, or McDonald’s USA decides the tuition assistance request for an employee in a Colorado Springs location. This relegates local business owners, who are invested in tailoring employment offerings to their unique communities, to a “store manager” at best. Some national brands own all of their stores, but this is not a feasible or desirable model for every enterprise.
Now, the Trump administration seeks to reinstate the four-factor test, but with a more nuanced approach to whether entities must actually exercise control over workers. This is the right approach for an issue that carries great consequences for businesses, especially for women-owned businesses.
Entrepreneurship, independent contracting, staffing, and franchising are important economic pathways for individuals to pursue their American dream. The Trump Labor Department recognizes this reality, and this proposed joint-employer rule gets it right.