Franchise systems, and many licensing arrangements contain anti-poaching provisions. These provisions are being tested under the antitrust laws as being anticompetitive. This article will discuss the benefits and burdens of including such provisions in your agreements.

These “no-poach” or “anti-poaching” clauses are standard provisions that restrict franchisees from soliciting or hiring employees of the franchisor or another franchisee of the same franchise system. Formerly enforced by courts as legitimate efforts to prevent cannibalization of employees from one franchisee to another, are now the subject of scrutiny by 16 state attorneys general and at least seven federal district court cases. U.S. District Court Judge Anita Brody of the Eastern District of Pennsylvania denied a motion under 12(b) (6) for dismissal of such an antitrust claim in Fuentes v. Royal Dutch Shell, 2019 US. Dist. Lexis 224708 (EDPA Nov. 25, 2019).

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