Batteries Plus contract has ‘no-poaching’ clause

Hartland-based Batteries Plus LLC is among companies that prohibit their franchisees from hiring employees of other stores in the chain, a practice that has come under fire recently.

Early this week, attorneys general from 10 states and the District of Columbia wrote a letter to Arby’s, Burger King and other franchisers, expressing concern that “no-poaching” provisions could hurt employees by limiting potential opportunities for better jobs and higher pay.

And on Thursday, seven other chains, including McDonald’s, agreed to end no-poaching policies. Their decisions followed a threatened lawsuit by the state of Washington.

Such policies are widespread in the franchising world. A study last year by Princeton University economists Alan Krueger and Orley Ashenfelter found that more than half of the contracts of 156 of the largest franchisers barred their franchisees from hiring employees of other units in the chains.

That practice reduces opportunities for low-wage workers and leads to “wage stagnation,” Washington state Attorney General Bob Ferguson said in a statement announcing the agreement with McDonald’s and other franchising companies.

“Because employees cannot move to another location within their corporate brand, their current location may have less incentive to give them raises,” Ferguson said.

Batteries Plus LLC is a specialty retailer that, as of the end of 2017, had 720 Batteries Plus Bulbs stores. Among those were 663 owned by franchisees.

The company’s contract with franchisees says they cannot employ or recruit anyone working at another Batteries Plus Bulbs store as a store manager or repair technician.

The contract is included in the franchise disclosure document on file with the Wisconsin Department of Financial Institutions.

Asked about the provision Friday, Batteries Plus CEO Russell Reynolds said in a statement, “This is a complicated issue and we’re continuing to review it under the advice of counsel.”

Russell said several employees of Batteries Plus LLC have gone to work for franchisees, become minority partners with franchisees or become franchisees themselves.

“This has never been a contentious issue between our employees, our franchisees and us,” he said.

Another major Wisconsin-based franchiser, quick-service restaurant chain Culver’s, was listed in the Princeton study as including a no-poaching provision in its franchise contract.

But Culver’s spokesman Paul Pitas said by email that the company removed the contract restriction on franchisees hiring each other’s employees in 2015.

Culver’s had 641 restaurants as of the end of 2017, with all but seven owned by franchisees.