Vertical Restraints and Labor Markets in Franchised Industries

70 Pages Posted: 19 Jul 2022 Last revised: 30 Mar 2023

See all articles by Brian Callaci

Brian Callaci

Open Markets Institute

Sergio Pinto

University of Maryland; Instituto Universitário de Lisboa (ISCTE-IUL), DINÂMIA'CET

Marshall Steinbaum

University of Utah Department of Economics

Matthew Walsh

Burning Glass Technologies

Date Written: July 6, 2022

Abstract

This paper combines 530 digitized franchising contracts at the franchise chain level with employer-identified job ads from Burning Glass Technologies to establish stylized facts about franchising labor markets and their relation to the vertical restraints and contractual provisions that limit the autonomy of franchisees vis a vis their franchisors. We report novel findings about the application of vertical restraints like Resale Price Maintenance, Exclusive Dealing, and No-poaching Clauses, among many others, to a low-wage workforce. A legal regime that favors the franchising business model incentivizes franchisees to profit at the expense of workers and to limit egalitarian tendencies operating in the workplace.

Keywords: franchising, vertical restraints, monopsony

JEL Classification: J01, J41, J42, K21, L2, L42

Suggested Citation

Callaci, Brian and Pinto, Sergio and Steinbaum, Marshall and Walsh, Matthew, Vertical Restraints and Labor Markets in Franchised Industries (July 6, 2022). Available at SSRN: https://ssrn.com/abstract=4155571 or http://dx.doi.org/10.2139/ssrn.4155571

Brian Callaci

Open Markets Institute ( email )

1440 G Street NW
Washington, DC 20005
United States

Sergio Pinto

University of Maryland ( email )

College Park
College Park, MD 20742
United States

Instituto Universitário de Lisboa (ISCTE-IUL), DINÂMIA'CET ( email )

Portugal

Marshall Steinbaum (Contact Author)

University of Utah Department of Economics ( email )

1645 Central Campus Dr.
Salt Lake City, UT 84112
United States

HOME PAGE: http://https://faculty.utah.edu/u6024209-Marshall_Steinbaum/hm/index.hml

Matthew Walsh

Burning Glass Technologies

One Lewis Wharf
Boston, MA 02110
United States

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