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Run the Payroll Fee Auditor →Blog · Payroll Management · Franchise
Franchise Operations: Payroll Compliance Guide (2026)
Payroll compliance for franchises rests on the federal rules that reach this industry specifically, 4 of which are cited on this page, plus the deposit and filing duties every employer carries. BEG runs franchise payroll for $25 per employee per month in your existing platform or $45 on isolved, all-inclusive, live in 3 to 5 business days.
The rules that reach franchises specifically
The Department of Labor's FLSA joint employer regulation at 29 CFR Part 791 is currently marked Reserved on the eCFR, with the last change dated October 5, 2021 when the 2020 joint employer rule was rescinded. There has been no DOL joint employer regulation in force since then.
On April 23, 2026 the Department of Labor published a proposed rule to restore joint employer regulations to 29 CFR Part 791, with comments due June 22, 2026. The preamble states that neither courts nor the Department have applied the FLSA to extend joint employer status to all general contractors and franchisors.
Under the NLRB standard in force at 29 CFR 103.40, an entity is a joint employer only if it shares or codetermines essential terms and conditions of employment by possessing and exercising substantial direct and immediate control over wages, benefits, hours, hiring, discharge, discipline, supervision or direction. The 2023 NLRB rule was vacated by a federal district court on March 8, 2024, and the Board formally restored the 2020 text effective February 27, 2026 (91 FR 9707).
As of July 1, 2026, state minimum wages range from the $7.25 federal rate in states with no state law or a lower state rate (such as Georgia at $5.15 and Wyoming at $5.15, where the federal rate governs) up to $18.40 in the District of Columbia, $17.13 in Washington, $16.94 in Connecticut and $16.90 in California. Many states adjust the rate annually by formula, and some cities set higher local rates not shown in the DOL table.
The duties every employer carries
Federal income tax withholding, Social Security and Medicare, FUTA, deposits on the monthly or semiweekly schedule the lookback period sets, quarterly Form 941, annual W-2s and, for franchises paying contractors, 1099-NEC at the $2,000 threshold in force for tax years after 2025. A late deposit starts at a 2 percent failure-to-deposit penalty and climbs to 15 percent.
A completed Form I-9 must be kept for every person on payroll for three years after the date of hire or one year after employment ends, whichever is later, and must be produced within three business days of an inspection request. This applies even when an employee leaves shortly after being hired.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- The Department of Labor's FLSA joint employer regulation at 29 CFR Part 791 is currently marked Reserved on the eCFR, with the last change dated October 5, 2021 when the 2020 joint employer rule was rescinded. There has been no DOL joint employer regulation in force since then. [29 CFR Part 791 (eCFR, as of September 10, 2026)]
- On April 23, 2026 the Department of Labor published a proposed rule to restore joint employer regulations to 29 CFR Part 791, with comments due June 22, 2026. The preamble states that neither courts nor the Department have applied the FLSA to extend joint employer status to all general contractors and franchisors. [DOL WHD proposed rule, Joint Employer Status Under the FLSA, FMLA and MSPA (April 23, 2026)]
- Under the NLRB standard in force at 29 CFR 103.40, an entity is a joint employer only if it shares or codetermines essential terms and conditions of employment by possessing and exercising substantial direct and immediate control over wages, benefits, hours, hiring, discharge, discipline, supervision or direction. The 2023 NLRB rule was vacated by a federal district court on March 8, 2024, and the Board formally restored the 2020 text effective February 27, 2026 (91 FR 9707). [NLRB, 29 CFR 103.40 (eCFR) and 91 FR 9707]
- As of July 1, 2026, state minimum wages range from the $7.25 federal rate in states with no state law or a lower state rate (such as Georgia at $5.15 and Wyoming at $5.15, where the federal rate governs) up to $18.40 in the District of Columbia, $17.13 in Washington, $16.94 in Connecticut and $16.90 in California. Many states adjust the rate annually by formula, and some cities set higher local rates not shown in the DOL table. [DOL WHD State Minimum Wage Laws (updated July 1, 2026)]
- A completed Form I-9 must be kept for every person on payroll for three years after the date of hire or one year after employment ends, whichever is later, and must be produced within three business days of an inspection request. This applies even when an employee leaves shortly after being hired. [USCIS Handbook for Employers M-274, section 10.0]
Read the full guide to the payroll compliance library, and the rest of the franchise payroll library.
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Frequently Asked Questions
Franchise compliance: 29 CFR Part 791 (eCFR, as of September 10, 2026)
The Department of Labor's FLSA joint employer regulation at 29 CFR Part 791 is currently marked Reserved on the eCFR, with the last change dated October 5, 2021 when the 2020 joint employer rule was rescinded. There has been no DOL joint employer regulation in force since then.
Franchise compliance: DOL WHD proposed rule, Joint Employer Status Under the FLSA, FMLA and MSPA (April 23, 2026)
On April 23, 2026 the Department of Labor published a proposed rule to restore joint employer regulations to 29 CFR Part 791, with comments due June 22, 2026. The preamble states that neither courts nor the Department have applied the FLSA to extend joint employer status to all general contractors and franchisors.
Franchise compliance: NLRB, 29 CFR 103.40 (eCFR) and 91 FR 9707
Under the NLRB standard in force at 29 CFR 103.40, an entity is a joint employer only if it shares or codetermines essential terms and conditions of employment by possessing and exercising substantial direct and immediate control over wages, benefits, hours, hiring, discharge, discipline, supervision or direction. The 2023 NLRB rule was vacated by a federal district court on March 8, 2024, and the Board formally restored the 2020 text effective February 27, 2026 (91 FR 9707).
What does managed payroll cost for a franchise?
$25 per employee per month inside your existing platform or $45 on BEG's isolved HCM, all-inclusive, with a $500 monthly minimum. Joint employer liability, multi-entity payroll and franchisor reporting requirements are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Franchise Operations. BEG manages payroll at $25-$45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Wage and Hour Division
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