USA: Franchising could be affected by announced federal focus on wage collusion, noncompetes, and ‘other anticompetitive practices’.

Carl ZWISLER | USA | 2017-01-18


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That possibility involves terms in many franchise agreements that prohibit franchisees from soliciting employees away from other franchises or from the franchisors itself. Under the new emphasis, such ‘anti-poaching’ agreements could be deemed illegal – or at least subject to investigations or litigation.

The new ‘Antitrust Guidance for HR Professionals’ jointly issued by the FTC and the United States Department of Justice (DOJ), instructs human resources professionals how to spot and report collusion among competing employers that may violate the antitrust laws, such as wage collusion or no-poaching agreements. The indication is that going forward, the DOJ will criminally investigate allegations that employers have agreed amongst themselves on emplyee compensation or not to solicit or hire one another’s employees. Whether this same theory will be applied to franchise agreement antipoaching provisions remains to be seen.

Although these announcements do not include specific new prohibitions and generally do not require immediate action, they do raise the possibility of near-term actions for which employers and franchisors should be watchful. For exemple, in formulating new versions of franchise agreements for 2017 and beyond, franchisors should consider whether to include anti-poaching language.


Carl Zwisler, IDI franchising country expert for U.S.A. and Quentin Wittrock, Gray Plant, Mooty


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