For the last several years, the attention of franchise lawyers has been focused on the subject of joint employer liability. This topic has been dragged through the courts as though it were a ping-pong ball, with courts and administrative officials pronouncing one rule, and then pronouncing another. This has made it difficult for franchise lawyers to advise clients on this subject. Most recently, the courts/administrators have stated that joint liability issues would be decided by an examination of numerous factors, with no lawyer knowing exactly how to advise clients as to the weight of importance that would be given to any of these factors. With the switch to the Trump Administration in 2017, it looked almost certain that the test for joint employer liability would return to old principles—that is, the courts would examine the controls placed on a franchisee by the franchisor, and if the controls crossed an imaginary line, there was too much control. A franchisor would then have joint liability for the franchisee’s sins in several areas, mostly relating to labor and employment issues. Meanwhile, courts have continued to struggle with non-competes, rendering a plethora of decisions each year on this issue, again making it difficult for lawyers to properly counsel clients.

In the meantime, a new employment issue is taking center stage—the subject of employee “poaching” in the franchising context. Non-competes and “no-poaching” of another franchisee’s employees are provisions that have been found in franchise agreements for decades. There is no need at this point to provide an example of a non-compete. However, many of us have never focused on the significance of a no-poaching provision. Typically, a no-poaching provision might read as follows:

Interference With Employment Relations of Others. During the term of this Franchise Agreement, Franchisee shall not employ or seek to employ any person who is at the time employed by Franchisor, any of its subsidiaries, or by any person who is at the time operating a XXX franchise to leave such employment. This paragraph shall not be violated if such person has left the employ of any of the foregoing parties for a period in excess of six (6) months.