On July 12, 2018, seven franchise systems entered into legally binding “assurances of discontinuance” with the Washington State Attorney General’s Office, which required them to remove “no poach” clauses (also known as “anti-poaching,” “non-solicitation,” and/or “no hire” clauses) from their franchise agreements on a national scale. Those franchise systems are: Arby’s, Auntie Anne’s, Buffalo Wild Wings, Carl’s Jr., Cinnabon, Jimmy John’s, and McDonald’s.
While these “assurances” impose obligations upon those seven franchise systems, it is important for franchisees to know that they, too, will likely be impacted as follows:
- If you are a franchisee of one of those seven franchise systems, and your franchised business is located in Washington state, your franchisor must remove the “no poach” clauses within 120 days of July 12, 2018;
- If you are a franchisee of one of those seven franchise systems in any other state, Puerto Rico, or Washington D.C., your franchisor must remove the “no poach” clauses when your Franchise Agreement comes up for renewal; and
- If you are a franchisee of one of those seven franchise systems, your franchisor must inform you of the specific requirements under the assurance of discontinuance.
What exactly does this mean for franchisees?
As a franchisee of any of those seven franchise systems, the “no poach” clause in your franchise agreement is likely no longer enforceable. Depending on where your franchise business is located and where your franchise agreement is in its respective term, be aware that your franchise agreement may change to reflect the assurance of discontinuance agreed to by your franchisor. As a result, keep in mind that neither you nor other same-brand franchisees in your area may be bound by the “no poach” clause, meaning there may be more freedom of movement of your employees and the employees of the other franchisees in your area.
*This blog is intended solely for informational purposes and should not be construed as providing legal advice. Please feel free to contact us with any questions you may have regarding this blog post.