Franchise No-Poach Agreements: When Your Next Job Needs Your Boss’s Permission

Franchise no-poach antitrust cases concern agreements that restrict employers within a franchise chain from recruiting or hiring one another’s workers. The restriction can sit in a contract between businesses that the worker never sees. Another location wants to hire you. The work uses skills you already have. Yet the employer you want to leave gets to decide whether the move happens. A release request, a recruiter’s instructions and the response to an application can show how that control worked.

How a Franchise No-Poach Restriction Works

A franchise no-poach agreement can stop an employer from approaching a worker, hiring someone who applies independently, or hiring without the current employer’s permission. Those restrictions interrupt different parts of the same job search.

A no-solicit rule blocks recruiting contact. A no-hire rule reaches the hiring decision itself. A release requirement makes the existing employer’s approval part of that decision. The Department of Justice and Federal Trade Commission’s January 2025 worker guidelines address these forms of agreement, including restrictions among franchisees and between a franchisor and its franchisees. The agencies explain that businesses can compete for workers even when they collaborate in other parts of their business.

The McDonald’s employee complaint described separately owned and managed restaurants operating under the same brand. It alleged that the franchise agreements preserved competition for restaurant customers while restricting competition for employees. Under the alleged arrangement, the businesses could compete for the customer’s order while agreeing not to compete for the person filling it.

According to the complaint, the standard franchise clause prohibited employing or seeking to employ someone working for another McDonald’s restaurant, including company-operated restaurants. Its exception required the worker to have left the covered employment for more than six months. The restriction therefore reached a worker who had already left, as well as one trying to move directly to another location.

The complaint also alleged that online applications separately asked whether an applicant had worked at McDonald’s before. It described that question as a way to flag employees of competing franchisees. An application screen could put the franchise agreement into practice before a hiring manager discussed pay.

The Better Job That Needed a Release

In the McDonald’s complaint, a department manager alleged that another nearby franchise wanted to hire her for the same job with higher pay, better promotion opportunities and a better shift. The new position offered an eventual pay increase of 23%. But the prospective employer said it needed a release from her existing franchise, Bam-B.

She asked for one. The complaint describes the answer:

Too valuable to let another employer hire her, while her own employer withheld the raises and promotion opportunities she sought. That is the contradiction at the center of her allegation.

Her experience also explains why another restaurant carrying the same sign mattered. The complaint described proprietary computer systems, inventory procedures, equipment and management training. She alleged that the skills she had developed were valuable inside the McDonald’s system but did not transfer readily to other restaurants. She later said she left for lower-paid, entry-level retail work.

The Records That Show Who Controlled the Move

In the manager’s account, she lost the raise and the other franchise lost the hire it wanted. The records connect that blocked opportunity to the people who controlled it.

The franchise agreement and amendments show which hiring rule applied, while recruiter messages and release requests show who enforced it. Offers, pay records and completed transfers let us compare the opportunity denied with the moves employers allowed.

The person seeking the job and the person recruiting for it may know different parts of the same event. A manager may know why a release was refused. A recruiter may know which employers were off limits. Their accounts become more useful when the messages, application and hiring decision connect.

Why Franchising Did Not Settle the Hiring Question

The fact that franchising expands the restaurant business did not settle whether its hiring restriction was needed. In its August 2023 opinion, the Seventh Circuit set aside the judgment for McDonald’s and required a closer look at that question.

A business arrangement can produce more restaurants while a separate term restricts the employees who work in them. The court required attention to whether the hiring restriction was reasonably necessary to the franchise arrangement.

Training That Another Franchise Wanted to Pay For

If training is offered as the reason for a hiring restriction, the practical questions concern the training itself: what the worker learned, who paid for it, and how the restriction related to that investment. The federal worker guidelines call for examining whether a hiring restriction is reasonably necessary to a broader business collaboration.

The McDonald’s complaint described franchisees bearing travel costs for management training. It also alleged that experience with the chain’s systems made an employee especially useful to another restaurant in the chain.

The same training can therefore sit on both sides of the dispute. A business may point to its investment. A worker may point to skills that a different employer wants to pay more to use. We connect those explanations to the jobs covered, the duration of the restriction and the way permission was granted or refused.

Removing the Clause and Settling the State Case

An older franchise agreement can explain why a recruiter continued to require permission after the standard contract changed. The agreement and the hiring instructions need to be examined together.

McDonald’s removed the restriction from its standard contracts in 2017 and entered a Washington attorney general agreement in 2018. A separate employee complaint alleged that removing the term from the new standard form did not change existing franchise agreements. It also alleged that a company-operated restaurant told a worker another franchise could not even discuss a job with her without a release.

That is why the older agreement, the amendment and the hiring instruction all matter. A change announced at headquarters and the answer given to an applicant are different events.

In its June 2020 account of the statewide initiative, the Washington Attorney General’s Office reported that 237 corporate franchisors had signed binding agreements ending no-poach practices nationwide. The initiative extended beyond restaurants to businesses including gyms, automotive services and convenience stores.

The office also described its settlement with Jersey Mike’s. In August 2019, the chain agreed to eliminate the clauses from its franchise agreements and paid the State of Washington $150,000. The state agreement addressed the use of the restriction. A worker’s claim for lost compensation asks a further question about what that restriction did to the worker’s opportunities and pay.

What Other No-Poach Cases Show

Other no-poach cases show the same permission mechanism in recruiter messages, internal lists and responses to attempted hires.

Rail Suppliers and Permission to Hire

The Knorr-Bremse and Wabtec case shows how a rival’s permission can restrict hiring outside the franchise setting too.

The case resulted in an entered civil judgment in July 2018 restricting hiring and recruiting agreements.

Technology Recruiting and the Call Never Made

The Department of Justice’s civil complaint involving Adobe and other technology employers addressed agreements not to cold call employees. It alleged that Apple placed Adobe on an internal list barring calls and that Adobe instructed recruiters to treat Apple employees as off limits.

Here the restriction operated at the first approach. The recruiting list matters because it can explain why a qualified employee never heard about a competing opportunity. The worker’s own file may show less than the recruiter’s instructions.

Staffing Restrictions on Hiring and Pay

The VDA OC plea concerned rival staffing firms agreeing against nurse hiring and raises, outside the franchise setting.

Which Case Fits the Hiring Records?

We assess what the hiring records could mean for your lost compensation or a possible whistleblower reward, starting with the agreement, your role and the opportunity it blocked. We also assess whether the Antitrust Division’s reward program fits the conduct and documents you know.

A whistleblower case under the False Claims Act can pay 15% to 30% of what the government recovers. Whether the hiring evidence also connects to false government claims is a question we work through with you.

When You Know Who Stopped the Hire

Our whistleblower experts want to hear why a franchise applicant needed the current employer’s permission and who enforced that requirement.