Tag Archives: Franchises

Buffalo Wings and Rings makes Chicago expansion a top priority

~~ A big player is entering the Chicago market to rival Buffalo Wild Wings.

~~ Read about it here – thanks to 1851Franchise.com

 

 

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Jimmy John’s Non-Compete Employee Agreements – Fair or Unfair?

A variety of recent articles report Jimmy John’s Subs requires all employees, even line workers and drivers, to sign an agreement not to work for any competing sandwich shop for 2 years after working for Jimmy John’s.  I have been getting some questions on email and social media looking for my take on this as a F&B business person.

The reality is that in most states a non-compete for workers other than management or technical specialists is not enforceable.  There’s a long history of rulings that non-competes can’t be used to prevent someone from making a living with skills they learned working at a company after they quit or are terminated.  I can’t imagine that Jimmy Johns corporate legal and HR staff would not know this.  So the most likely explanation for the existence of the non-compete clause is simply intimidation, to scare employees from leaving for another sandwich shop.  Low level employees don’t have the money to even consider any legal defense, so just the threat of even an illegitimate non-compete clause will almost always be enough to intimidate the worker.

Whether the existence of this clause is an unfair and objectionable move on the part of Jimmy John’s depends on if you think it’s OK to use employee agreements to scare workers with unenforceable clauses, relying on the worker’s lack of resources to force compliance to a legally and civilly illegitimate demand.

While I am a big admirer of the Jimmy John’s rags to riches success story, I don’t agree with this tactic, and professionally I believe a business would lose more than it would gain in genuine staff loyalty and performance with these types of demands.  Additionally it’s “bad PR” that could hurt a chain’s image with customers when it’s revealed.

Read some more information on this issue, the legal, civil, employment law and public perception aspects here, here and here.

 

JimmyJohnsFounder
Jimmy John’s Founder John Liautaud built his huge sub sandwich chain starting with a single shop in a garage in Charleston Illinois.

 

Two decisions that change the rules for the restaurant biz

Two big recent developments reshaping business rules for franchise operators and brands:

(1)  California State Assembly Thursday (8/14/14) passed a bill strengthening the rights of business people who operate franchises against the companies such as Subway and McDonalds who issue the franchise licenses.  It will now be harder for these big brands to revoke a franchisee’s license, and easier for the franchisee to sell their business or join a franchise association without interference from the brand.

(2)  In another recent development, the National Labor Relations Board general counsel held that a franchise brand company (Subway etc) can be considered a “joint employer” with the franchisee when it comes to labor law violations, eliminating the traditional legal insulation of the brand company from activities of its franchisees.

From the brands perspective these are losses, but from the franchisees and workers point of view they are wins.  Thoughts?