Seven Brands Agree to Excise Poaching Verbiage
Arby's is one of seven chains agreeing with Washington state to no longer enforce anti-poaching clauses.
No sooner had one prominent franchise attorney, Amy Cheng of Cheng Cohen, told Franchise Times that franchisors should not unilaterally yank anti-poaching clauses out of their contracts than seven franchise brands did just that.
The chains are Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carl’s Jr., Cinnabon, Jimmy John’s and McDonald’s. In a settlement with Washington’s Attorney General Bob Ferguson announced July 12, the seven chains agreed to stop enforcing the so-called anti-poaching provisions, which restrict the employees of one franchisee in a chain from going to work for another operator in the same chain.
Ferguson believes the no-poach language leads to wage stagnation. “My goal is to un-rig a system that suppresses wages in the fast food industry,” he said in a press release.
Cheng said in an interview last week, two days after 11 attorneys general separately launched a probe of eight different franchise brands into anti-poaching language they may have in their contracts, that she’s advising franchises to sit tight, for now.
No-poaching clauses benefit franchisees, she says, so they can be assured that investment into employee training and retention won’t be lost to another operator. Hence, franchisors that decide on their own to stop enforcing the clauses risk angering operators. “If I’m a franchisee, I would not be happy” in that situation.
She believes it prudent to wait until federal or state legislation is passed before “freaking out and wanting to modify their contracts.”
Carl Zwisler of Gray Plant Mooty in Washington, D.C., believes franchises should carefully review the language in their contracts, and make sure it is narrowly defined to cover exactly whom the franchisor wants it to cover, such as higher-level general managers rather than front-line workers.
He also points out that targets of the various anti-poaching probes, being launched on several fronts including by prominent Democratic senators and in the courts, will have to go through lengthy processes to answer questions.
“Look carefully at the language that you have. If you have anti-poaching language in your agreements, decide how important it is to you and whether you’re willing to litigate it,” Zwisler said.
Nils Okeson, general counsel for Inspire Brands in Atlanta, owners of Arby’s and Buffalo Wild Wings, and Sarah Powell, general counsel for Focus Brands’ franchises Auntie Anne’s and Cinnabon, did not return calls for comment but we of course will include them if they reply.