By Guest Contributor Gregory A. May, Esq. – www.kieselandmay.com

Most savvy buyers aren’t willing to purchase a business without some type of assurance that the Seller is not going to compete with them going forward. The answer in most cases is a non-compete agreement, but what makes an enforceable agreement?

First things first, you need to be sure that the agreement is in writing and executed properly. Be sure that the corporate entity and the underlying individuals execute the agreement. If the agreement is to benefit a third party or assignee, then the agreement should specifically identify the third party and/or specifically provide for assignees.

Next, the courts will only protect “legitimate business interest”, which includes, but is not limited to: trade secrets, confidential business or professional information, substantial business relationships, goodwill and extraordinary or specialized training. Any restrictive covenant not supported by a legitimate business interest is unlawful and is void and unenforceable. §542.335, Florida Statutes.

Finally, what is a reasonable restriction in terms of time and geographical scope? Well, Florida Statutes provide that any restraint three (3) years or less is presumed to be reasonable and any restraint in excess of seven (7) years would be deemed unreasonable. §542.335, Florida Statutes.

So depending on the size of your customer base, type of business, and the training involved, a “reasonable” time period is probably going to fall somewhere between 3 and 7 years, with 3 and under being the safest of bets. With regards to geographical scope, the area in which competition is restricted must not be broader than is necessary to protect the employer’s interests. This is a judgment call, which again, is based on the individual business.

Happy negotiating and good luck in your new business!

Gregory A. May, Esq.
Kiesel and May, Attorneys at Law
2121 McGregor Boulevard
Fort Myers, Florida 33901
T: (239) 334-1800
F: (239) 332-3927
www.kieselandmay.com

Michael Monnot

941.518.7138
Mike@infinitybusinessbrokers.com
1910 Park Meadows Drive, Suite 202
Fort Myers, FL 33907

https://infinitybusinessbrokers.com