In a significant development, McDonald’s Corporation has petitioned the US Supreme Court to hear a case concerning alleged hiring restrictions between the fast-food giant and its franchises.
The case, rooted in a 2018 lawsuit filed by former employees, contends that the no-poach agreements between McDonald’s and its franchise operators violate the Sherman Antitrust Act.
The petition for writ of certiorari, filed on November 21, raises pivotal questions about the applicability of federal antitrust laws to hiring restrictions between franchise operators under the same brand. Additionally, McDonald’s is seeking clarification on whether courts should disregard the potential “pro-competitive impact” of such restrictions on other markets.
The legal saga stems from a ruling by the U.S. Court of Appeals for the 7th Circuit in August, which allowed a lawsuit challenging a no-poach clause in franchise agreements to proceed. The clause in question prohibited McDonald’s franchise operators from hiring employees of other franchisors or those directly employed by McDonald’s for a six-month period following their departure.
Furthermore, a separate clause outlined in the 7th Circuit’s decision barred franchises from actively soliciting employees from other franchises, contributing to the complexity of the legal battle.
The plaintiffs in the original lawsuit argue that these hiring restrictions amount to a “per se” violation of the Sherman Antitrust Act, suggesting that they represent an inherent violation of competition laws without the need for further examination.
McDonald’s, in its appeal to the Supreme Court, is seeking clarity on the broader legal implications of such hiring restrictions. The company contends that the current legal landscape lacks a clear standard for assessing the antitrust implications of no-poach agreements within franchise networks.
The outcome of this case could set a precedent for how similar disputes are handled in the future, impacting not only the fast-food industry but also various other sectors utilizing franchise models. As the Supreme Court considers whether to hear McDonald’s appeal, legal experts anticipate that the case could provide essential guidance on the delicate balance between protecting fair competition and acknowledging legitimate business interests within franchise relationships.
Source: Restaurant Dive