S 1007

South Carolina General Assembly
126th Session, 2025-2026
Bill 1007
Indicates Matter Stricken
Indicates New Matter
(Text matches printed bills. Document has been reformatted to meet World Wide Web specifications.)
A bill
TO AMEND THE SOUTH CAROLINA CODE OF LAWS BY ENACTING THE
"FRANCHISE ACT OF 2026" BY ADDING CHAPTER 45 TO TITLE 41 SO AS TO PROVIDE
DEFINITIONS AND DEFINE INSTANCES OF DIRECT AND IMMEDIATE CONTROL, AND to PROVIDE
EXCEPTIONS, AMONG OTHER THINGS.
Be it enacted by the
General Assembly of the State of South Carolina:
SECTION 1.  This act may be cited as the "Franchise Act of 2026."
SECTION 2.  Title 41 of the S.C. Code is amended by adding:
CHAPTER 45
Franchise Businesses
    Section
41-45-10.  For purposes of this chapter:
       (1)
"Franchise" means any continuing commercial relationship or arrangement,
whatever it may be called, in which the terms of the offer or contract specify,
or the franchise seller promises or represents, orally or in writing, that:
  (a)
the franchisee will obtain the right to operate a business that is identified
or associated with the franchisor's trademark, or to offer, sell, or distribute
goods, services, or commodities that are identified or associated with the
franchisor's trademark;
  (b)
the franchisor will exert or has authority to exert a significant degree of
control over the franchisee's method of operation, or provide significant
assistance in the franchisee's method of operation; and
  (c)
as a condition of obtaining or commencing operation of the franchise, the
franchisee makes a required payment or commits to make a required payment to
the franchisor or its affiliate.
       (2)
"Franchisee" means any person who is granted a franchise.
       (3)
"Franchisor" means any person who grants a franchise and participates in the
franchise relationship. Unless otherwise stated, it includes subfranchisors.
For purposes of this definition, a "subfranchisor" means a person who functions
as a franchisor by engaging in both presale activities and postsale
performance.
       (4)
"Direct and immediate control" means having the authority to make or by making
day-to-day decisions that have a regular or continuous consequential effect on
an essential term and condition of employment of a franchisee's employees.
       (5)
"Essential terms and conditions of employment" includes wages, benefits,
scheduling, hiring, discharge, discipline, supervision, and direction.
    Section
41-45-20.  (A) A franchisor
exercises direct and immediate control over wages if it determines the wage
rates, salary, or other rate of pay that is paid to a franchisee's individual
employees or job classifications.
    (B) A
franchisor exercises direct and immediate control over benefits if it
determines the fringe benefits to be provided or offered to a franchisee's
employees. A franchisor does not exercise direct and immediate control over
benefits by permitting a franchisee, under an arm's length contract, to
participate in its benefit plans including, but not limited to, health
insurance plans, pension plans, and tuition assistance.
    (C) A
franchisor exercises direct and immediate control over scheduling if it
determines work schedules or the work hours, including overtime, of a
franchisee's employees. A franchisor does not exercise direct and immediate
control over scheduling by establishing a franchisee's operating hours, or by
establishing minimum staffing levels to satisfy the franchise's service
standards.
    (D) A
franchisor exercises direct and immediate control over hiring if it determines
which particular employees will be hired or which employees will not. A
franchisor does not exercise direct and immediate control over hiring by
encouraging or recommending changes in staffing levels or by setting minimum
recruiting and hiring standards, such as those required by law, for consumer or
employee safety, or for brand protection.
    (E) A
franchisor exercises direct and immediate control over discharge if it decides
to terminate the employment of a franchisee's employee. A franchisor does not
exercise direct and immediate control over discharge by bringing misconduct or
poor performance to the attention of a franchisee that makes the actual
discharge decision, by expressing a negative opinion of a franchisee's
employee, or by setting minimum standards of performance or conduct, such as
those required by law, for consumer or employee safety, or for brand
protection.
    (F) A
franchisor exercises direct and immediate control over discipline if it decides
to suspend or otherwise discipline a franchisee's employee. A franchisor does
not exercise direct and immediate control over discipline by bringing
misconduct or poor performance to the attention of a franchisee that makes the
actual disciplinary decision, by expressing a negative opinion of a
franchisee's employee, or by setting minimum standards of performance or
conduct, such as those required by law, for consumer or employee safety, or for
brand protection.
    (G) A
franchisor exercises direct and immediate control over supervision by
consistently and directly instructing a franchisee's employees how to perform
their work or by issuing employee performance appraisals. A franchisor does not
exercise direct and immediate control over supervision if:
       (1)
its instructions are limited and routine;
       (2)
it:
  (a)
sets brand standards for the performance of the work;
  (b)
offers training materials including, but not limited to, training
demonstrations for a franchisee to use to train employees of a franchisee; or
  (c)
establishes minimum training requirements for employees of a franchisee; or
       (3)
it provides operational support, guidance, and assistance to the franchisee to
promote and protect the brand's goodwill and quality of products and services
provided to the consumer.
    (H) A
franchisor exercises direct and immediate control over direction by assigning
particular employees of a franchisee their individual work schedules,
positions, and tasks. A franchisor does not exercise direct and immediate
control by offering resources and tools for a franchisee to consider using to
direct franchisee's employees' work schedules, positions, and tasks.
    Section
41-45-30.  For purposes of workers compensation in Title 42, unemployment
benefits, and civil rights regulations, a franchisor is not deemed the employer
of a franchisee or a franchisee's employees.
    Section
41-45-40.  A franchisor is the employer of a franchisee or a franchisee's
employees only if the franchisor directly and immediately controls one or more
essential terms and conditions of employment of the franchisee's employees.
    Section
41-45-50.  (A) This chapter should
be liberally construed to preserve the independence of franchisors and
franchisees as separate employers and businesses.
    (B)
Nothing in this chapter:
       (1)
affects a franchisor's liability under federal law, including the Fair Labor
Standards Act or the National Labor Relations Act; or
       (2)
limits a franchisor's liability if it exercises direct and immediate control of
essential terms and conditions of employment provided in this chapter.
SECTION 3.  This act takes effect upon approval
by the Governor.
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This web page was last updated on March 12, 2026 at 11:28 AM