Takeaway: The appeals court's decision in this case highlights the caution that companies—whether operating as part of a franchise system or as competitors—must exercise in entering into formal or informal agreements relating to the retention of employee talent. In the current labor market, it may be tempting for competing businesses to enter into informal agreements or understandings to prevent staff departures, as well as rehiring of former employees. However, it is not uncommon for federal and state regulators to investigate arrangements that may implicate the Sherman Act or similar state antitrust statutes.

The 11th U.S. Circuit Court of Appeals found that plaintiffs' claims under the Sherman Act could proceed because the defendants' "no-hire" agreements amounted to "concerted action" in restraint of trade under the act.

The majority of Burger King Corp. (BKC) restaurants are independently owned franchise establishments, while the remainder are corporate-owned restaurants. BKC grants franchisees a license in exchange for a franchise fee and a percentage of royalties generated from operations. In addition to the franchise fee and royalties, Burger King requires franchisees to agree to various nonfinancial obligations set forth in a franchise agreement.

Between 2010 and 2018, such franchise agreements contained, among other obligations, a provision that provided, in part, that "[n]either BKC nor franchisee will attempt … to entice or induce, or attempt to entice or...

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