Small businesses are the beating heart of the U.S. economy, employing 61 million workers. But not all small businesses have their own brand names. Many operate as independent franchises under the logo of a larger company. In fact, the U.S. franchise system comprises more than 750,000 small businesses, including restaurants, fitness centers, moving companies, cleaning services, and hardware stores, among others.

Newly proposed federal legislation will help protect this ecosystem of small businesses from a regulation that threatens their autonomy.

Recently introduced by Sen. Tim Scott of South Carolina, the Employee Rights Act of 2022 will clarify the Labor Department’s “joint employer” standard so franchisers will continue to partner with entrepreneurs in local communities. You see, franchisees may operate under the branding of a bigger parent company like McDonald’s, but they are largely responsible for hiring employees, distributing compensation, scheduling hours, and other typical duties associated with running a business.

An overbroad government definition of “joint employer” will strangle the relationship parent companies have with independent franchisees, effectively shutting down the traditional franchise system. Without the clarification included in the act, the opportunity for so many want-to-be entrepreneurs to operate their own businesses independently and chase the American dream will be stripped away.

Beyond shoring up franchise small businesses, the act also...

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