Theory and Evidence on Employer Collusion in the Franchise Sector

Alan Krueger and Orley Ashenfelter

No 24831, NBER Working Papers from National Bureau of Economic Research, Inc

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.

JEL-codes: J08 J23 J41 J42 J47 J53 J62 J63 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-com, nep-cta and nep-lab
Note: LS PE
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Citations: View citations in EconPapers (36)

Published as Alan B. Krueger & Orley Ashenfelter, 2022. "Theory and Evidence on Employer Collusion in the Franchise Sector," Journal of Human Resources, vol 57(S), pages S324-S348.

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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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