Joint Employer Risk in Franchising (2026 Guide)
Bottom Line
The National Labor Relations Board (NLRB) has reverted to the 2020 Joint Employer Rule, backing away from the broader 2023 standard. For franchisors, that reduces some exposure- but joint employer risk has not disappeared.
Multiple agencies apply different tests, courts continue to interpret the issue, and political shifts can change the rules again. Franchisors still need to operate carefully to avoid being pulled into employment disputes involving franchisee employees.
What Changed: The Return to the 2020 Joint Employer Rule
The NLRB has confirmed that the 2020 Joint Employer Rule governs joint employment analysis under the National Labor Relations Act. Under that rule, a business is considered a joint employer only if it exercises substantial hands-on control over essential employment terms.
These terms include:
- Wages and benefits
- Hours and scheduling
- Hiring and firing decisions
- Discipline
- Supervision and direction of work
Where Franchisors Accidentally Create Joint Employer Risk
Many franchise systems unintentionally drift into risky territory while trying to support franchisees. Common examples include:
- Advising or requiring franchisees to adopt a corporate employee handbook
- Participating in or advising on performance reviews or disciplinary decisions
- Providing advice or direction on employee supervision
- Requiring certain scheduling practices
- Reviewing or advising on wages and compensation
- Advising or requiring specific hiring or interview procedures
How Franchisors Can Support Franchisees without Creating Risk
The safest approach is maintaining clear operational boundaries between franchisor guidance and franchisee employment decisions.
- Avoid direct involvement in franchisee employment decisions
- Ensure franchisees retain control over hiring, discipline, and supervision
- Structure HR support so advice flows through independent legal channels
How myHRcounsel Helps Protect Franchise Systems
myHRcounsel helps franchisors support franchisees while maintaining the legal separation that reduces joint employer risk.
- Guidance to prevent accidental joint employer situations
- Attorney support for employee handbooks and employment policies
- Real‑time answers to HR and employment law questions
- Monitoring of regulatory changes across agencies and courts
Protect Your Franchise System
myHRcounsel provides franchisors and franchisees with on‑demand access to licensed employment attorneys through the ASK HR™ platform, helping systems maintain compliance while protecting operational boundaries. Schedule a demo with us today.