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New Texas Law Says Franchisors are Not Employers of Franchisees or Their Employees

By  |  July 21, 2025

By: Edward L. Puzzo (Trade Regulation Talk)

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    In this short post, author Edward L. Puzzo discusses a new Texas law, effective September 1, 2015, which clarifies that franchisors are not considered employers—or co-employers—of their franchisees or the franchisees’ employees. This designation applies across various legal contexts, including employment discrimination, wage and hour laws, and workplace safety regulations. The law aims to shield franchisors from liability tied to employment-related actions of independent franchisees.

    The legislation was introduced in response to 2014 National Labor Relations Board (NLRB) actions against McDonald’s and its franchisees, in which the NLRB classified them as joint employers. Texas Senator Charles Schwertner, who sponsored Senate Bill 652, stated the bill was designed to counteract NLRB decisions that challenged the traditional franchisor-franchisee relationship and raised legal risks for franchisors…

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