PawnMaster Blog

Non-Competition Agreements as a Business Strategy

Posted on 22 Dec 2017

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Why would you not want to protect your legitimate business interests, your intellectual property, your customer relationships, and your customer lists? Protecting your livelihood at all costs should be part of your business strategy.  Think for the future, and solidify the protection of all that you’ve worked for. There is one specific protection I believe is a must in your business, and that is a non-compete agreement. I would be kept up at night if I didn’t use these contracts.  They protect your customer basethe relationships and goodwill developed by an organizationin in terms of customer relations is ultimately what keeps you progressing.

Imagine that you're a leader in your industry with a great reputation and suddenly, “Poof!” that blue chip list of clients is taken to a competitor by a former manager or employee. Why would you not want to use a non-compete agreement to prevent a former staff member from capitalizing on that goodwill and competing with their original employer? You work for years to build your competitive advantage, and a lot of that could disappear with the termination/resignation of a disgruntled or money-hungry former employee. We believe in this process at Data Age Business Systems. We protect our proprietary software, our intellectual property, and understand that we have a customer list worthy of the blue chip moniker.

If you agree with my above statements, there are a few things I suggest you think about. As you evaluate the strength of your non-compete as you put it together, you have to keep in mind that reasonableness is key to the agreement; be reasonable in geographical scope and time, and gear the non-compete toward the industry you are in. These are the items the courts look at in deciding whether or not to enforce a non-competition agreement. The court will balance the need to protect the employer’s legitimate business interests with any burden that enforcement of the agreement would place on the employee.  With a good working knowledge of how to proceed in developing a non-compete, you'll be given the ability to solidify its enforceability.

A solid, binding non-compete provision does not stand alone. There are other complementary terms that you may want to include in your agreement that will help minimize the risk of competition, such as provisions for confidentiality, non-solicitation, and non-disparagement. In addition, you can also reduce competition by protecting your intellectual property with copyrights, trademarks and trade secrets, which automatically provide you with exclusive rights by law.

I’ll close with this statement; Would you rather invest $2,000 in having an enforceable non-compete written by an attorney well-versed in the language and law, or take the chance on losing your entire client base, which in turn costs you tens of thousands of dollars and leaves you saying,  “If only I had done that...”

Bill Reinacher

Written by Bill Reinacher

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