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    Attorneys General Target Fast-Food Franchisors Over 'No-Poach' Agreements

  • Are brands keeping employees from working at other franchises in their system?

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    Some worker advocates argue that no-poach provisions result in lower-wage growth.

    Attorneys general are taking aim at quick-service brands and the so-called “no poach” agreements allegedly found in some franchise contracts. 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. The Boston Business Journal received a sample letter from Massachusetts Attorney General Maura Healy that said officials “have reason to believe” these chains “may be including” a no-poach provision in their franchise agreements.

    Dunkin’, based in Canton, Massachusetts, responded by saying that its agreements with franchisees do not bar them from hiring employees from other franchises. The “no-poach” comment refers to restrictions franchises face under agreement regarding their ability to hire employees from other franchises of the same chain.

    The Boston Business Journal said officials expressed concern that the agreements hurt workers’ ability to find better-paying jobs. It also limits franchisees ability to hire the workers they want.

    Dunkin’ denied this provision exists in its franchise agreements, 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.”

    It added that the company is “not in a position to intercede in franchisees’ employment matters,” and that employees at its franchised restaurants can accept employment with any employer they chose, for whatever reason.

    The New York Business Journal also reported that New York Attorney General Barbara Underwood is one of the 11 looking to review franchise agreements regarding this practice. Underwood said in the article: “Workers deserve to have the opportunity to earn higher wages and seek promotions—yet no-poach provisions make that impossible. My office will continue to protect the rights of workers in New York and across the country.”

    The letter was led by Healey and signed by Underwood, as well as attorneys general of Illinois, Pennsylvania, New Jersey, District of Columbia, Massachusetts, Maryland, Minnesota, California, Rhode Island, and Oregon.

    They said, according to The New York Business Journal, that 58 percent of major franchisors have no-poach provisions in their franchise agreements. It’s 80 percent for fast-food companies. The letter requested the brands provide documents that include copies of franchise agreements and communications related to no-poach provisions by August 6.

    Additionally, The New York Business Journal reports that the attorneys general interviewed workers impacted by no-poach agreements, including a McDonald’s worker in Iowa who said they were barred from leaving a part-time job at one McDonald’s to take a full-time spot at another.

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