To: Members of the House Committee on Education and Workforce
From: National Taxpayers Union
Date: July 21, 2026
Subject: NTU’s views on the July 21 Markup
I. Introduction
On behalf of National Taxpayers Union, the nation’s oldest taxpayer advocacy organization, we write to express our views on legislation slated for consideration before the House Committee on Education and Workforce on July 21, 2026. While NTU recognizes that the Committee is considering a broader package of legislative proposals, we would like to highlight H.R. 5267, the American Franchise Act, which we believe warrants special attention. NTU applauds the Committee for your continued efforts to advance proposals that protect the interests of taxpayers and uphold free-market principles.
II. Legislation
H.R. 5267, the American Franchise Act - Support
Authored by Rep. Hern (R-OK), this legislation protects the franchise business model by codifying a clear joint employer standard for franchises. In line with historical precedent, H.R. 5267 clarifies that 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 of employment. This straightforward standard provides the small business community with the policy certainty needed to comply with the law and plan for the future.
Running a franchise is one of the most reliable ways for everyday entrepreneurs to start and grow a business. Yet, in recent years, the National Labor Relations Board (NLRB) has expanded what is called the “joint employer” standard. This change means that both the franchisor and the franchisee can be held responsible for the same workers. For local owners, that blurs the clear line of responsibility that has always made the franchise model work so well. Instead of having the freedom to make their own decisions about hiring, training, and running their day-to-day operations, franchisees are left facing legal uncertainty. That confusion doesn’t just weigh on business owners—it trickles down to employees too, who lose the stability and clarity that come with working for a locally-run business.
Facing the prospect of more lawsuits and regulatory burdens, franchises will either pull back or increase their involvement in the day-to-day operations of their franchisees, which, in turn, limits the productivity gains the franchise model has to offer. The NLRB’s expansion of the joint employer standard through its 2015 decision cost franchise businesses over $33 billion per year, resulted in 376,000 lost job opportunities, and led to 93% more lawsuits. If this amount of uncertainty isn’t bad enough, the whipsaw effect of different administrations issuing different rules in a partisan back and forth leaves small business owners unable to plan ahead. As such, H.R. 5267 represents a commonsense reform that provides much needed clarity after years of regulatory uncertainty.
At a time when affordability is a widespread concern among the American people, policymakers should foster a regulatory environment that gives economic actors the confidence to take risks and expand their business. Protecting the franchise business model is an important step in the right direction.
III. Conclusion
Small businesses are the backbone of the American economy, and this legislation helps protect them from Washington overreach. Notwithstanding the demagoguery surrounding this issue, the American Franchise Act does not strip workers of protections or make them more vulnerable. It simply clarifies who is responsible for employment decisions, preserves liability where real control exists, and stabilizes a legal standard that has become increasingly politicized. Should you have any questions about the recommendations in this memo, please do not hesitate to reach out to Alexander Ciccone (aciccone@ntu.org).