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    7 Chains Remove 'No-Poach' Clauses from Franchisee Contracts

  • The hiring practice has come under scrutiny from attorneys general in recent days.

    Arby's
    Arby's agreed to drop “no-poach” clauses from its franchisee contracts.

    Under agreements with Washington State announced July 12, seven restaurants chains have agreed to remove “no-poach” clauses from their franchisee contracts, a hiring practice that has come under scrutiny from attorneys general in recent days. Arby’s, McDonald’s, Jimmy John’s, Auntie Anne’s, Buffalo Wild Wings, Carl’s Jr., and Cinnabon pledged to drop the provision, which keep workers from leaving one franchise and going to work at another in the same chain.

    The brands reached a deal with Attorney General Bob Ferguson of Washington State, whose investigation is separate from the one being conducted by 11 attorneys general. In that case, Dunkin’ Brands, Panera Bread, Arby’s, Burger King, Five Guys Burgers and Fries, Little Caesars, Popeyes Louisiana Kitchen, and Wendy’s were all sent letters asking for information about their use of these pacts. Dunkin’ swiftly responded by telling The Boston Business Journal, “All Dunkin’ Donuts restaurants are independently owned and operated by individual franchisees, independent business owners solely responsible for running their day-to-day operations, including all employment decisions.”

    New York attorney general Barbara Underwood said in a letter that it’s believed 80 percent of fast-food brands have no-poach provisions in their franchise agreements.

    According to The New York Times, the seven chains that agreed with Ferguson also vowed not to enforce no-poach clauses nationwide in addition to stripping them from existing franchise contracts in Washington. They cannot be included in new and renewed contracts, either.

    The NYT echoed Underwood’s sentiment about the rampant nature of the clauses in fast food, citing a study by Princeton economists Alan Krieger and Orley Ashenfelter published last year. They found that no-poach clauses affected about 70,000 individual restaurants in the U.S., or more than a quarter of fast-food venues. They said the restrictions appeared aimed at limiting completion and turnover, and could hurt wages in the process. McDonald’s removed the clause from its franchise contracts last year. The agreement with Ferguson makes it a legally binding matter.