Are No-Poach Deals Hidden in Fast Food’s Secret Sauce?

July 11, 2018

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On Monday, attorneys general from 10 states sent a letter to eight fast-food companies to find out if company franchises use “no-poach” clauses in their contracts. In the letter, the AGs request information and documents that may contain “no-poach agreements,” which refers to any language that “restricts or prevents franchisees from hiring or soliciting employees of and/or other franchisees for employment.” Included in this are no-solicitation, non-compete and/or no-hire agreements.

“I find this case a little peculiar,” says Jason Finkelstein, an attorney at Cole Schotz P.C. “I wasn’t aware of [the potential wide-spread] use of no-poach agreements among franchisees from the same corporation.”

Indeed, Finkelstein says, plenty of corporations and franchises implement no-compete clauses, but to use no-poaching for franchises from the same company seems like overkill.

As the law continues to evolve on these matters, please note that this article is current as of date and time of publication and may not reflect subsequent developments. The content and interpretation of the issues addressed herein is subject to change. Cole Schotz P.C. disclaims any and all liability with respect to actions taken or not taken based on any or all of the contents of this publication to the fullest extent permitted by law. This is for general informational purposes and does not constitute legal advice or create an attorney-client relationship. Do not act or refrain from acting upon the information contained in this publication without obtaining legal, financial and tax advice. For further information, please do not hesitate to reach out to your firm contact or to any of the attorneys listed in this publication.