What restriction regarding employee solicitation and hiring was Auntie Annes required to remove from future franchise agreements as part of the Assurance of Discontinuance with the State of Washington?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
On July 12, 2018, to resolve objections raised by the Washington Attorney General and without admitting any liability, we voluntarily entered into an Assurance of Discontinuance ("AOD") with the State of Washington (No. 18-2-17231-4SEA), where we agreed to remove from future franchise agreements a provision which restricts a franchisee from soliciting and/or hiring our or our affiliates' employees or the employees of our other franchisees, which the Attorney General alleged violated Washington state and federal antitrust and unfair practices laws.
Similar provisions have historically been found in franchise agreements across all industries.
While we never enforced this provision against any franchisee, we agreed, as part of the AOD, not to enforce this provision in any existing franchise agreement and to notify its franchisees accordingly.
The State of Washington did not assess any fines or other monetary penalties against us or our affiliates.
We do not include such restrictive provisions in our agreements and are bound by the AOD to not enforce these clauses in any existing franchise agreements.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, as part of an Assurance of Discontinuance (AOD) with the State of Washington, Auntie Annes agreed to remove a specific provision from its future franchise agreements. This provision restricted franchisees from soliciting or hiring employees of Auntie Annes, its affiliates, or other Auntie Annes franchisees. The Washington Attorney General had raised objections, alleging that this restriction violated Washington state and federal antitrust and unfair practices laws. The AOD was entered into on July 12, 2018, under No. 18-2-17231-4SEA.
While Auntie Annes did not admit any liability and stated that it had never enforced the provision, it agreed to not enforce it in any existing franchise agreements and to notify its franchisees accordingly. The State of Washington did not impose any fines or monetary penalties on Auntie Annes or its affiliates as part of this agreement.
This change means that current and future Auntie Annes franchisees in Washington State are not bound by any restrictions that prevent them from hiring or soliciting employees from Auntie Annes corporate locations or from other franchise locations. This could provide franchisees with a larger pool of potential employees and more flexibility in staffing their stores. It also reflects a commitment from Auntie Annes to comply with antitrust and fair practice laws, which benefits franchisees by ensuring a more competitive and fair business environment.