Disagreeing over Agreements: A Cross-Sectional Analysis of No-Poaching Agreements in the Franchise Sector

By Catherine E. Schaefer

In October 2016, the Department of Justice Antitrust Division announced its intent to proceed criminally against parties to no-poaching agreements, or agreements between or among employers not to hire each other’s workers. Consequently, a wave of class action antitrust lawsuits has raised questions about the legality of no-poaching or no-hire provisions that certain franchised food businesses use. Fast-food restaurant chains, including McDonald’s, Carl’s Jr., and Pizza Hut, have recently found themselves embroiled in such litigation. This Note examines prior antitrust litigation involving no-poaching agreements between companies and discusses the differences and similarities between these cases and the cases involving franchised businesses. In analyzing the key issues that courts must confront to resolve current and future cases specific to franchises, this Note proposes that courts should employ a per se rule against no-poaching agreements among franchisors and franchisees.