The franchising industry is defending the use of non-compete clauses.
Non-poaching agreements are coming back into the spotlight thanks to both the Justice Department and Democratic lawmakers. As detailed in a recent article by the Chicago Tribune, these non-poaching agreements prevent brands from hiring people from other locations because of agreements that are signed with the corporate locations. While specific non-poaching agreements vary, they typically limit a franchise owners’ ability to hire workers from other units within the franchise’s entire system.
The Chicago Tribune notes that non-poaching clauses are now included in up to 56 percent of large franchises, which is up about 20 percent from two decades ago. These agreements have long been opposed by worker advocacy groups, but now, they’re being publicly opposed in Congress. Democratic Senators Cory Booker and Elizabeth Warren have introduced the first legislation that would make these agreements illegal. The Department of Justice is also reviewing the legality of these agreements, arguing that some violate the federal antitrust law.
The franchising industry is defending the use of non-compete clauses. International Franchise Association spokesperson Matthew Haller said, “Franchising has generated more wealth and opportunities for employees to move up the income ladder than any other business model in our nation’s history. Provisions in franchise agreements allow franchise owners to protect the significant financial investments they make to train employees the skills and methods necessary to deliver the product or service to customers.”