Another year has passed in the franchising world as we approach the International Franchise Association&'s upcoming Legal Symposium in Washington, D.C. from May 5-7--the 52nd installment of the event. Each year seems to usher in a new challenge for all of us to overcome. Looking back just five years ago, we saw the birth of the "joint employer" crisis in late 2013 in the NLRB General Counsel&'s amicus brief in the Browning-Ferris Industries case--an issue which to this day poses an existential threat to the franchise model.
More recently, beginning in 2017 and continuing today, we have evaluated and assessed how best to respond to public outcry over so-called "no-poach" provisions appearing in franchise agreements.
No-poach provisions have created the biggest stir in franchising over the past year, flowing through multiple channels: (1) very-public Civil Investigative Demands issued by the State of Washington Attorney General&'s Office beginning in February 2018 (and continuing to this day) to numerous brand-name franchisors, requesting documents and interrogatory responses relating to their use of no-poach provisions and ultimately demanding the removal and non-enforcement of such provisions in franchise agreements system-wide; (2) the introduction in March 2018 by Sens. Cory Booker and Elizabeth Warren of the pejoratively-named "End Employer Collusion Act" to outlaw no-poach provisions; (3) the issuance in July 2018 by Sens. Booker and Warren of a form letter to multiple franchisors inquiring about their use of no-poach provisions; (4) the concurrent commencement in July 2018 of an investigation by 11 state attorneys general into the no-poach-provision practices of eight well-known franchise systems; and, last but not least, (5) the proliferation of plaintiff antitrust class actions against franchisors over their use of no-poach provisions.
FTC FRANCHISE RULE
As if the public discourse and legal wrangling over joint employer and no-poach issues have not commanded enough of our attention, the Federal Trade Commission announced on Feb. 13, 2019, that it is seeking public comment on whether to make changes to its Franchise Trade Regulation Rule as part of its systematic review of all current FTC rules and guides. Barring an extension, the current deadline for public comments is April 21, before we assemble in D.C.
The matters I have identified above of course are not the only developments in franchising over the past...