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Franchisee’s employee sought a job change and applied to a nearby McDonald’s company-owned (McDonald’s Operating Companies or “McCoOp”) restaurant.* After applying and being interviewed, the Plaintiff’s application was turned-down due to a no-hire provision in the Franchisee’s franchise agreement barring employment at the McCoOp, or any other McDonald’s. The specific language read as follows: Interference with Employment Relations of Others. During the term of this Franchise, Franchisee shall not employ or seek to employ any person who is at the time employed by McDonald’s, any of its subsidiaries, or by any person who is at the time operating a McDonald’s restaurant or otherwise induce, directly or indirectly, such person 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.”

Plaintiff filed suit asserting anti-trust, and state-law pendent claims under (1) IL Antitrust Act, (2) and IL consumer fraud and deceptive practices act.

The Court dismissed the state-law claims, but declined to dismiss the Sherman Anti-Trust Act count. The Court noted that Plaintiff had asserted that these no-hire clauses (which had been abandoned by McDonald’s by the time this motion was heard) caused “a restraint affecting competition in the supply of an output (labor) for a final product.” Thereby, a “cheaper input means a cheaper final price…” (*11) The Court focused upon the allegations using the “quick-look approach” and ruled that Plaintiff had properly alleged a horizontal restraint of trade. These clauses were intended to not only prevent labor movement among franchise and company restaurants, but to restrain wages, as well. It remained to be see, noted the Court, whether the Plaintiff would ultimately be successful on the claim, as she had not yet pled, and of course, proved, the required element of “market power in a relevant market.” Plaintiff was granted leave to amend her pleadings, accordingly.

*McDonald’s Facts: There are a total of 36,000 Company-owned and franchised stores in the world, which employ 2 Million employees. [Just 90,000 of these employees are employed by McCoOps in the USA; see, ].

Citation: DESLANDES v. McDONALD’S USA, LLC, McDONALD’S CORPORATION, and DOES 1 through 10, 2018 U.S. Dist. LEXIS 105260 *

 BE ADVISED that these comments are not intended as legal opinions and are not to be relied upon as legal advice. If you need franchise-related legal advice, please contact us to discuss the specifics of your franchise business.

© KilcommonsLaw, P.C. 2018