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Research ArticleArticles
Open Access

Theory and Evidence on Employer Collusion in the Franchise Sector

Alan B. Krueger and Orley Ashenfelter
Published online before print October 13, 2021, 1019-10483; DOI: https://doi.org/10.3368/jhr.monopsony.1019-10483
Alan B. Krueger
1Industrial Relations Section, Firestone Library, Room A2H, Princeton University, Princeton, NJ 08544 and NBER
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Orley Ashenfelter
2Orley Ashenfelter, Industrial Relations Section, Firestone Library, Princeton University, Princeton, NJ 08544 and NBER,
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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 "nopoaching 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 No.
  • J08
  • J23
  • J41
  • J42
  • J47
  • J53
  • J62
  • J63

This open access article is distributed under the terms of the CC-BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0) and is freely available online at: http://jhr.uwpress.org

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Journal of Human Resources: 58 (6)
Journal of Human Resources
Vol. 58, Issue 6
1 Nov 2023
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Theory and Evidence on Employer Collusion in the Franchise Sector
Alan B. Krueger, Orley Ashenfelter
Journal of Human Resources Oct 2021, 1019-10483; DOI: 10.3368/jhr.monopsony.1019-10483

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Theory and Evidence on Employer Collusion in the Franchise Sector
Alan B. Krueger, Orley Ashenfelter
Journal of Human Resources Oct 2021, 1019-10483; DOI: 10.3368/jhr.monopsony.1019-10483
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Keywords

  • J08
  • J23
  • J41
  • J42
  • J47
  • J53
  • J62
  • J63
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