DOJ and FTC Issue New Antitrust Guidelines with Implications for Franchising

The Department of Justice (DOJ) and Federal Trade Commission (FTC) recently unveiled updated antitrust enforcement guidelines targeting labor practices, with significant implications for the franchising industry. According to Holland & Knight’s January 2025 analysis, these guidelines reflect the Biden-Harris administration's emphasis on promoting fair competition in labor markets. Baker McKenzie’s insight highlights that the guidelines, issued as the administration nears its conclusion, aim to curb anticompetitive practices such as wage fixing, no-poach agreements and other restrictive arrangements in franchise contracts.

The guidelines emphasize stricter scrutiny of contractual agreements between franchisors and franchisees that could suppress employee mobility or competition. According to Holland & Knight, “These policies represent a more aggressive stance on issues like non-compete clauses and exclusivity agreements.” Baker McKenzie echoes this sentiment, noting that the DOJ and FTC are “laser-focused on practices that impede labor market competition.” Franchise businesses will need to assess their agreements to ensure compliance, particularly with respect to franchisees’ ability to attract and retain employees.

For franchisors, the new policies may necessitate a reevaluation of common practices to avoid liability under the revised framework. Holland & Knight stresses that businesses should “carefully analyze existing agreements for terms that could be construed as anti-competitive.” Meanwhile, Baker McKenzie underscores the risk of penalties for violations, stating, “The agencies have made it clear that enforcement in this area will be a top priority.” This could influence how franchisors structure support and control mechanisms, as well as how franchisees independently manage their workforces.

The full impact of these guidelines will depend on how they are enforced and interpreted in practice. However, the message from the DOJ and FTC is clear: practices that restrict competition in labor markets will face heightened scrutiny. Franchisors and franchisees should proactively review their agreements and seek legal counsel to mitigate risk under this evolving regulatory environment.

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