American Franchise Act: A Game Changer for Hotel Franchising and Worker Protection, All You Need to Know

Published on September 12, 2025

The American Franchise Act (AFA) sponsored by Representatives Kevin Hern and Don Davis seeks to bolster the US hotel business and defenses the hotel franchising model. Supported by the American Hotel and Lodging Association (AHLA), the legislation brings much-needed step for the stability and certainty to both franchisees and franchisers. AFA protects the proven business model and allows small business owners, especially women and minority owners, to gain access to invaluable resources and operational support along with brand recognition. Moreover, it also fosters the rights of workers, and promotes free enterprise to create new business and new jobs while improving the country’s travel experience. This shift brings prospect of growth and opportunities for the hotel industry.

Supporting Small Business Owners and Enhancing the Guest Experience

The US is home to around 36,000 franchised hotels, and the hotel franchising model has helped countless small business owners across the nation build thriving businesses. Franchisees manage the day-to-day operations of their hotels while receiving valuable support from the franchisor, including branding, marketing, and operational guidance. This collaborative approach results in consistent and high-quality experiences for hotel guests, which in turn fosters trust and encourages repeat bookings from tourists.

The AFA offers much-needed clarity to franchisees and franchisors by establishing a clear joint employer standard. This will not only protect workers’ rights but also ensure that small business owners can continue to operate with autonomy and without the uncertainty that has plagued the industry in recent years. The AFA’s amendments to the Fair Labor Standards Act (FLSA) and the National Labor Relations Act (NLRA) are expected to offer much-needed stability to both hotel owners and employees.

How the American Franchise Act Benefits Tourists and the Travel Industry

For travellers, the passage of the American Franchise Act has the potential to enhance their experience in several key ways. First, the AFA will ensure that franchised hotels across the US continue to provide reliable, consistent services that travellers have come to expect. With 80 percent of all franchised hotels in the USA operating under major brands, tourists can count on high standards of cleanliness, service, and amenities. These consistent experiences are crucial for maintaining trust in the accommodation sector, especially for international tourists who rely on well-known hotel brands for comfort and security.

Moreover, the stability provided by the AFA encourages more small business owners to enter the hotel industry, which could lead to more diverse and unique accommodations for tourists. From boutique hotels to family-owned inns, the increase in independent hotel operators will likely create more options for travellers seeking different experiences beyond the traditional large chain hotels.

Economic Impact: More Jobs and Better Opportunities for Workers

In addition to supporting entrepreneurs, the American Franchise Act will also have a significant impact on the US labour market, benefiting an estimated 3 million workers in the hotel industry. By providing clarity on employment relationships, the AFA ensures that workers are protected under fair labour laws while helping employers retain autonomy over their businesses. The expansion of hotel franchises can also stimulate local economies by creating new jobs in various regions of the US, from bustling cities like New York and Los Angeles to quieter destinations like Napa Valley or the Florida Keys.

For tourists, this means a more vibrant and diverse hospitality industry, with a wider range of employment opportunities available to local communities. As the tourism sector continues to grow, the American Franchise Act will play a vital role in creating a sustainable and dynamic workforce that can meet the evolving demands of the industry.

Encouraging Entrepreneurship in the Travel Industry

The introduction of the American Franchise Act aligns with the growing trend of entrepreneurship in the US travel industry. Aspiring hotel owners can now feel more confident in pursuing their dreams, knowing that the legal landscape will protect their business interests. This new legislation provides a framework for future hotel owners to enter the industry with the support of established brands while retaining their entrepreneurial spirit.

For travellers, this increased entrepreneurial activity can lead to more innovative and personalised travel experiences. As more small hotel businesses emerge, tourists can expect to find unique, locally owned accommodations that offer distinctive features and cater to specific niches, such as eco-tourism, luxury stays, or cultural experiences. The AFA’s support for entrepreneurs in the hotel sector is a win-win for both business owners and tourists alike.

A Bright Future for U.S. Hotels and Tourists

The American Franchise Act is a vital step for the continued success and development of the hotel industry. It protects the stakeholders of both the franchisor and franchisee, thus guarantees a future for hotel owners and employees. At the same time for tourists, the large suite of American hotels promises high-quality and budget-friendly accommodations, the luxury to choose from an array of large and small business hotels, and the opportunity to support small business hotel owners. The AFA provides the hotel industry with clear and supporting legal guidelines, enabling flourishing and prosperous hotels beneficial for both the resident population and the tourists visiting the USA.