Divided Washington Puts Franchise Act, Swipe Fees on Restaurant Agenda

Nearly one in four restaurant workers is an immigrant, and that single statistic explains why the 2026 midterm results landed hard on the restaurant industry's desk. Democrats took both the House and the Senate on Nov. 4, setting up two years of divided government under President Donald Trump and putting immigration, credit card fees and trade policy back in play for operators managing food and labor costs.

Two industry groups moved immediately. The National Restaurant Association wants progress on immigration reform, swipe fees and trade. The International Franchise Association is pressing Congress to pass the bipartisan American Franchise Act before year-end.

What does a Democratic Congress change for labor?

Plenty, potentially. The National Restaurant Association is advocating comprehensive reform that protects the existing workforce, updates the work visa system and builds a modern framework for future hiring. A Democratic-controlled Congress could bring renewed attention to worker protections and immigration — though reaching a deal with a Republican administration may prove difficult.

For operators, the practical question is simpler: can they keep the staff? Labor availability directly affects operating hours, service quality and unit growth.

The franchise side of the workforce equation runs through the American Franchise Act. The bill cleared the House Education and Workforce Committee in July and carries 158 House cosponsors. It would set a permanent standard under the Fair Labor Standards Act and the National Labor Relations Act clarifying when a franchisor shares legal responsibility for a franchisee's employees — an issue that has shifted through courts and administrations for years.

IFA President and CEO Matt Haller framed the stakes in a Nov. 4 statement: "IFA congratulates this year's winners and looks forward to working with both parties to protect franchise small businesses and the nine million working Americans they support."

He added: "With affordability clearly top of mind for voters, Congress has a narrow window to bring immediate relief to America's 832,000 franchise small businesses by passing the bipartisan American Franchise Act. With further uncertainty looming in the courts, small businesses can't afford to wait."

The IFA says the bill has bipartisan support in both chambers plus backing from the White House, the House Problem Solvers Caucus and franchise-community organizations. The ask targets the current Congress — meaning the lame-duck session is the immediate battleground.

Can swipe fees finally get cut?

The National Restaurant Association backs the Credit Card Competition Act, which would inject more competition into card processing. The association calls processing fees the third-largest operating expense for many restaurants, behind food and labor. The bill could get renewed attention in the new Congress, but its prospects remain uncertain, and any savings depend on the legislation advancing and actually moving processing costs.

On trade, the association wants predictable policies and continued tariff exemptions for products covered by the U.S.-Mexico-Canada Agreement. Restaurants source ingredients, beverages and equipment through domestic and international supply chains, and higher import costs tend to end up on menus.

Where the margins stand

The affordability pressure is measurable. The National Restaurant Association represents 15.7 million employees across nearly 1 million locations, and it reported that 42% of restaurant operators were not profitable in 2025 — roughly four in ten houses running in the red while customers scrutinize every dollar.

"Restaurants are at the intersection of the nation's affordability conversation, managing increasing costs and decreasing margins as their customers scrutinize every dollar they spend," President and CEO Michelle Korsmo said in the association's Nov. 4 statement.

For chains, the response goes beyond pricing. Value platforms, promotions, loyalty programs and menu engineering remain the levers for proving a visit is worth the spend. Operators will also hunt for efficiencies that don't degrade the guest experience.

The immediate marker is whether Congress passes the American Franchise Act before Dec. 31. After that, operators will watch how the new balance of power shapes labor, payments and supply-chain policy — while still managing what they control: food costs, labor percentage, traffic and the value on the plate.