McDonald’s and Other Fast Food Restaurants Agree to Eliminate Non Poaching Clause in Franchise Contracts

McDonald’s and several other fast food restaurants recently agreed to eliminate the non poaching clause from their franchise contracts, which will give their employees a more competitive employment environment.

Companies in the same industry often have a non poaching clause agreement to cut down on labor costs, as it prevents employees from seeking better jobs and reduces their negotiating power when discussing employment benefits.

The Washington State Attorney General recently announced that at least eight fast food restaurants have agreed to remove non poaching clauses from their franchise contracts, according to Law360.

McDonald’s and several other fast food companies previously had a non poaching clause in their franchise contracts, which employees and their advocates say created an unfair employment environment.

Overview of Non Poaching Clause Elimination Agreement

This clause allegedly prevented their employees from seeking different jobs with another franchisee, with the companies not forced to upkeep a competitive atmosphere for their fast food employees.

This means that McDonald’s and several other fast food companies did not have to offer a better wage rate or employment benefits, leaving their employees with fewer advantages. Now that the non poaching clause agreements are omitted, their employees no longer are constrained by their respective fast food employer.

Other fast food restaurants that have agreed to eliminate their non poaching clause agreements include Applebee’s, IHOP, Carl’s Jr., Church’s Chicken, Five Guys, Jamba Juice, Little Caesars, Panera Bread, and Sonic Drive-In.

The companies have over 15,000 locations throughout the United States, and agreed to remove the non poaching clause restrictions from their franchise contracts nationwide to avoid potential legal action from the state for this practice.

Washington Attorney General Bob Ferguson stated that this is a major step forward, but that his office is already set to target another set of restaurant chains that allegedly have similar non poaching clause policies in their franchise contracts. The Attorney General pointed out that non poaching clause policies were illegal under the antitrust provisions of Washington’s Consumer Protection Act.

According to the agreement the fast food companies signed, the restaurant chains have between 90 to 120 days to remove their non poaching clause policies from their existing franchise contracts in the state and throughout the rest of the country when their franchise contracts are up for renewal.

Some of the companies have already started the process of eliminating these clauses including Jamba Juice and Little Caesars. According to a spokesperson for Dine Brands Global Inc., the parent company of IHOP and Applebee’s, their respective companies have started similar business proceedings.

“Earlier this year, Applebee’s and IHOP decided that it was the right time to remove the provisions regarding employee poaching from each brand’s franchise agreements. Going forward, all future franchise agreements will no longer contain this legacy provision,” the spokesperson stated.

While McDonald’s and other fast food companies involved in the agreement did not immediately respond to questions, the Attorney General Office stated that the companies will cease the non poaching clause agreements in their franchise contracts nationwide.

Fast food employees who believe they are being denied better work opportunities and competitive wages due to a non poaching clause agreement between companies, may be able to file legal action for unfair business practices.

Join a Free Fast Food Employee Poaching Class Action Lawsuit Investigation

If you work for McDonald’s, Jimmy John’s, Pizza Hut, Little Caesars, Papa John’s, Domino’s, Burger King or Arby’s and were prevented from moving to a different franchise that is part of the same company, you may have been the victim of a no-poach agreement. If so, you may qualify to participate in this employee poaching class action lawsuit investigation.

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