Theory and Evidence on Employer Collusion in the Franchise Sector

Alan Krueger and Orley Ashenfelter

No 11672, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we study the role of covenants in franchise contracts that restrict the recruitment and hiring of employees from other units within the same franchise chain in suppressing competition for workers. Based on an analysis of 2016 Franchise Disclosure Documents, we find that "no-poaching of workers agreements" are included in a surprising 58 percent of major franchisors' contracts, including McDonald's, Burger King, Jiffy Lube and H&R Block. The implications of these no-poaching agreements for models of oligopsony are also discussed. No-poaching agreements are more common for franchises in low-wage and high-turnover industries.

Keywords: oligopsony; monopsony; no-poaching agreement; collusion; franchise (search for similar items in EconPapers)
JEL-codes: J41 J42 J63 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2018-07
New Economics Papers: this item is included in nep-com, nep-cta and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (35)

Published - published in: Journal of Human Resources, 2022, 57 (S), S324-S348

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https://docs.iza.org/dp11672.pdf (application/pdf)

Related works:
Journal Article: Theory and Evidence on Employer Collusion in the Franchise Sector (2022)
Working Paper: Theory and Evidence on Employer Collusion in the Franchise Sector (2018)
Working Paper: Theory and Evidence on Employer Collusion in the Franchise Sector (2017)
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