BUSINESS AND LAW

ASSIGNMENT 2

Name: Sinthia Tarannum Nancy

Student ID: 2018110817  
Contents
1. Introduction.........................................................................................................................................2
1.1 Restrictive Covenants: Not to Compete/ No-Solicitation / No-Hiring...............................................2
1.1.1 Suggestion..................................................................................................................................3
1.2 Access of Technology and Use..........................................................................................................3
1.2.1 Suggestion..................................................................................................................................4
1.3 Access and use of confidential information: Privacy Policy..............................................................4
1.3.1 Suggestion..................................................................................................................................5
1.4 Employee Matters: Performance Evaluation......................................................................................5
1.4.1 Suggestion..................................................................................................................................6
1.5 Discrimination & Health and Safety Policies....................................................................................6
1.5.1 Suggestions.................................................................................................................................6
2. Conclusion...........................................................................................................................................7
3. References...........................................................................................................................................8
1. Introduction

Pizza Hut (PH) is an international restaurant chain that was founded in 1958 by brothers Dan and
Frank Carney in their hometown of Kansas. The company is known for its unique way of serving
authentic Italian cuisine with an American twist. PH is split into several different restaurant
formats: the original family-style dine-in locations; storefront delivery and carry-out locations;
and hybrid locations that have carry-out, delivery, and dine-in options. By 1972, with 314 stores
nationwide, PH went public on the New York Stock Exchange. In 1978, PH was acquired by
PepsiCo, who later joined with Long John Silver’s and A&W Restaurants to become Yum!
Brands.

The size of the company and their scale of operation is massive and involves a very big number
of employees. In this write-up, we shall be discussing and reviewing the following aspects of the
organization mentioned above –

1. Restrictive Covenants
2. Access and use of Technology
3. Access and use of confidential information & policy
4. Employee Matters – Performance Evaluation
5. Discrimination & Health and Safety Policies

1.1 Restrictive Covenants: Not to Compete/ No-Solicitation / No-Hiring

PH globally operates many stores under the central management besides allowing franchises
worldwide. PH hire employees predominantly in two categories – Executives/Managers working
full time on a salary basis and part-time employees (e.g. Servers/Back of the house staff)
working on an hourly pay basis.

The hiring standards are maintained according to the guidelines issued by the management and
both centrally maintained stores and franchises are to adhere to the standards. Full time
employees at or above managerial level must provide consent to -
‘Covenant Not to Compete’ as part of their employment agreement whereby - At all times during
employment with PH and for a period of eighteen (18) months following termination for any
reason, whether with or without cause, employee agrees and covenants that:

(A) Executive shall not either directly or indirectly, alone or in conjunction with any other party
or entity, perform any services, work or consulting for one or more Competitive Companies
anywhere in the world. Examples of Competitive Companies include, but are not limited to:
Pizza Express, Inc.

(B) Executive shall not perform or provide, or assist any third party in performing or providing,
Competitive Services i.e. development, manufacture, marketing or sale of a product, product line
or service that competes with any product or services of PH, anywhere in the world, whether
directly or indirectly, as an employer, officer, director, owner, employee, partner or otherwise, of
any person, entity, business, or enterprise. 

1.1.1 Suggestion
Positive competition among employees and stores can be a metric for internal growth for both
the company and its employees. It will also allow room for strategic employee management and
valuation culture within the company. The famous ‘Ion V PH’ case is a great view here –
whereby Plaintiff Mr Ion alleged that – ‘no-solicitation and no-hiring agreement between and
among PH and PH franchisees, eliminated franchisees’ incentives and ability to compete for
management employees, and restricted management employees’ mobility.

Besides, technological improvements is leading to a much broader social presence for employees
in platforms like LinkedIn. So, broadening of network in such social platform may not be a
solicitation and therefore, it may give rise to unwarranted situations between employee and the
company. Hence, removal of such covenants can serve better for company and employee
relation.

1.2 Access of Technology and Use

PH’s goal of improving the overall effectiveness of its crew has been achieved by allowing use
of new management & POS systems. PH has outsourced its ICT support is provided by Spora
group and the systems encompasses - Scheduling/forecasting, marketing & distribution,
performance management, sales plan, order taking and making, etc.

MICROS system has provided PH with a base to not only operate more efficiently but added to
the overall organized management system through Intranet where employees can easily find
information to complete their trainings, DNA ordering systems for easier delivery orders and
cost effective marketing.

The Company provides a variety of electronic communications systems for use in carrying out its
business. The IT department maintains the Computer and Technology Resource Usage Policy on
behalf of the Company. Employees are expected to use the standard software provided by IT, or
identify to IT applications they need in the course of their work. Staff members are not permitted
to download applications, demos or upgrades without the involvement of IT. Failure to comply
with all components of the Computer and Technology Resource Usage Policy may result in
disciplinary action up to and including termination of employment.

1.2.1 Suggestion
However, there are added challenges with using technology which has legal ramifications should
it go wrong. Use of technology fall within the scope of the laws regulating the use of data,
evidence, creative works, and inventions namely -

a) Privacy law
b) The law of evidence
c) Copyright law
d) Patent law

1.3 Access and use of confidential information: Privacy Policy

PH has a 10 section privacy policy that outlines clearly on how confidential information is
collected, stored and used. The policy explains from how the data is collected to, how it is stored,
and how it is shared and legal rights related to confidential information.

The privacy policy maintains that under data protection law, PH Limited is the controller of that
information. Now, they may share personal information with third parties when opted in for
marketing purposes. Besides, the company relies on legal grounds to process information and
uses accordingly for various purposes like understanding business trends, marketing, legal
matters, etc. Information is not stored in identifiable format but may be stored for up to 10 years
in the company database.

1.3.1 Suggestion
The privacy policy may seem robust but reading the policy depicts a negative picture – i.e
exploitation of angles of interpretation of the Data Protection Act to use the information for
advantage. So, a more open and positively written policy is suggested.

More importantly, the Company do not mention of the ways they ensure the security of the
databases of the confidential information. This may have serious legal consequences in an event
like a hack.

1.4 Employee Matters: Performance Evaluation

The company uses performance appraisals as a tool for supporting communication between
an employee, supervisor, and management. Supervisors and employees are strongly
encouraged to discuss job performance and goals on an informal, day-to-day basis.

Performance appraisal discussions and documentation may reflect the following areas but are
not limited to these areas like work performance, ways it could exceeds expectations, goals to
consider or requirements to be set, agreements or disagreements on performance and other
work-related issues, possible results or ramifications.
You are encouraged to give your viewpoint during this discussion. Performance Appraisals
are directly related to Pay Increases for employees attaining the performance standards of at
least on target and above. However, no cost of living increases are given

1.4.1 Suggestion
Although the company seems to have a good appraisal system in place but it is much
dependent on managers marking the employees based on their thoughts. Therefore, personal
conflicts may impact an appraisal therefore eroding the robustness of the system and this
could mean the company having to face legal charges. I suggest an appraisal system where at
least one manager must be present alongside supervisor overseeing the appraisal thus cutting
down risks any reflection of personal conflicts.

1.5 Discrimination & Health and Safety Policies

Safety and security of employees is of vital importance to the Company. PH has a ‘Zero-
tolerance Policy’ towards Acts or threats of physical violence, including intimidation,
harassment and/or coercion, which involve or affect the Company, or which occur on company
property.

PH boasts a diverse working culture and does not support any discrimination under any basis. PH
do not employ underage children or forced laborers and prohibit physical punishment or abuse.

In order to maintain a fair and safe working environment, PH Worldwide Code of Conduct holds
the company accountable for treating our colleagues with respect and fairness, allowing them to
be recognized and rewarded based on their performance. Besides, all the employees, suppliers
and franchises must also comply with the applicable local labor laws, working hours and
accident laws and health and safety standards.
Harassment or discrimination because of age, gender, gender expression and/or identity, race,
religion, national origin, sexual orientation, or physical abilities has no place in the company and
strict actions are taken against the violators at all levels including termination of contract.

1.5.1 Suggestions
With ever increasing stress at workplace, it is of importance that employers also provide
attention to employees’ mental health as this almost goes unnoticed. Mental stress can have life
changing impact on employees and can also bring serious legal burden to a company. Therefore,
emphasizing on mental awareness through workplace stress management programs can serve the
company in many positive ways.

2. Conclusion
With annual revenue of over billions of dollars and 13,200 outlets worldwide, PH has grown to
become the largest pizza company in the world by market share and serves customers in 100
countries. However, The company’s core value of ‘great food builds great memories’ is certainly
great but it does have a few areas in restrictive covenants, privacy policy, workplace safety to
look into before they can be called the world’s most desired company by both the employees and
customers.
3. References

Pizzahut-lb.com. (2019). Terms Of Use. Retrieved from: https://www.pizzahut-lb.com/terms-

of-use

Anon, (2019). Retrieved from:

https://www.academia.edu/11175356/EMPLOYEE_HANDBOOK_For_Hourly_Employees_
and_Salaried_Managers

https://www.mirror.co.uk/money/jobs/understanding-zero-hours-contracts-what-4941165

Amended and Restated Master Franchise Agreement. (n.d.) Retrieved from

https://www.sec.gov/Archives/edgar/data/1508478/000119312511077213/dex101.htm

BOUTROUS, J. (2019, February 27). Restrictive covenants and legally protecting your
business in a tight labor market. Retrieved from
https://mcdonaldhopkins.com/Insights/Blog/Employer-Advocate/2019/02/27/Restrictive-
covenants-and-legally-protecting-your-business-in-a-tight-labor-market

Center, M, B. (2018, January 30). No-Hire and No-Solicit Covenants Could be overcooked.
Retrieved from https://franchiselaw.foxrothschild.com/2018/01/articles/food-service/no-hire-
and-no-solicit-covenants-could-be-overcooked/

Laken, A, Haley, T, & Maatman, G. (2018, April 13). Franchise “No-Hire” Agreement Class
Actions And The Single Enterprise Defense. Retrieved from
https://www.tradesecretslaw.com/2018/04/articles/restrictive-covenants/franchise-no-hire-
agreement-class-actions-and-the-single-enterprise-defense/

IN THE UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS

SHERMAN DIVISION. (n.d.) Retrieved from https://www.classaction.org/media/ion-v-
pizza-hut-llc.pdf

Part 22 of “The Restricting Covenant” Series: No-Poaching Agreements. (2019)

https://www.lexology.com/library/detail.aspx?g=4d197ac7-ff18-4239-9cd8-4a58e7652d48

How Pizza Hut Expanded Their ICT Technology Information Technology Essay. (2016,
December 5). Retrieved from https://www.ukessays.com/essays/information-
technology/how-pizza-hut-expanded-their-ict-technology-information-technology-essay.php

Legal Issues of New and Emerging Technologies. (2016, February 24). Retrieved from
https://resources.infosecinstitute.com/legal-issues-of-new-and-emerging-technologies/#gref

Privacy Policy. (2019). Retrieved from

https://www.pizzahut.co.uk/restaurants/about/privacy-policy/#

Our Team. (2019). Retrieved from http://www.yumcsr.com/people/cultureengage.asp

HUMAN RIGHTS AND LABOR PRACTICES POLICY. (2019). Retrieved from

http://www.yumcsr.com/people/human-labor-rights.asp

Pizza Hut. (2019). Retrieved from

https://www.yum.com/wps/portal/yumbrands/Yumbrands/company/our-brands/pizza-hut