Jimmy John’s will face antitrust claims, after an Illinois federal judge declined to dismiss allegations in a class action.

Plaintiffs claim the chain’s franchise agreement harmed competition by preventing franchisee employees from seeking employment at other locations. The complaint alleges employees suffered reduced wages, hours, employment benefits, professional growth and illegal working conditions due to the alleged restraint of trade among franchisees, which the complaint asserts was “orchestrated by Jimmy John’s itself.” The suit comes in the midst of an inquiry by several state attorneys general questioning “no-hire agreements” at several quick service restaurant chains.

Jimmy John’s franchise agreement says franchisees may not “solicit or initiate recruitment” of anyone currently or in the prior 12 months employed by Jimmy John’s or a franchisee, and that violation is a default and grounds for termination of the franchise agreement. The employees also signed non-compete agreements, agreeing not to work for any deli-style restaurant near a Jimmy John’s franchise for at least two years after ending their employment.

Jimmy John’s argued the hiring agreement was a lawful “vertical” restraint, as it was only between Jimmy John’s and franchisees. But the court disagreed, stating the agreements were horizontal in nature because the agreement’s structure let franchisees enforce the no-hire agreements against each other.

Challenges to “no-poaching” clauses in franchise agreements are becoming more frequent. In the past year, franchisee employees filed similar antitrust actions against several large international franchisors. Potential liability from these claims could be substantial due to the large numbers of employees in each class, and potential recovery of treble damages and attorneys’ fees. Franchisors, especially large systems, should review the franchise agreement to address no-poaching provisions.

Read more: Butler v. Jimmy John’s Franchise, LLC, S.D. Ill., ¶16,241