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Non-Competition Agreement in Franchisor-Franchisee Disputes


According to North Carolina law, non-competition agreements contained in an employment contract are “more closely scrutinized than” those contained in a contract for the sale of a business.  However, there is some question as to whether a franchise non-compete is similar to an employer-employee non-compete or a business acquisition non-compete. Recently, the North Carolina Court of Appeals tackled that issue with regard to a franchisor-franchisee relationship.  If you are a franchisor, employee, or business owner with a dispute over a non-competition agreement, contact Maginnis Law, PLLC  at 919.526.0450 to discuss your non-competition agreement.

The standard for the enforceability of a non-compete under North Carolina franchise law is that non-competes can be enforced to the extent that the non-competition provision is no more restrictive than is necessary to protect the legitimate interests of the franchisor. Courts will look at the reasonableness of the duration of the restriction, the reasonableness of the geographic scope of the restriction, and the extent to which the restriction is otherwise necessary to protect the legitimate interests of the franchisor.

Non-compete agreements are invariably questions of fact for a judge or jury to decide. These clauses are one of the few clauses in which their presence in a contract – even with clear unmistakable language – does not mean that the non-compete is enforceable.

If you are looking to determine if the non-compete clause in your agreement with your employer or franchisor is enforceable, contact the Raleigh business litigation attorneys of Maginnis Law, PLLC at 919.526.0450. Maginnis Law is a Raleigh civil litigation firm with business law attorneys handling disputes throughout the Research Triangle area, including Cary, Apex, Wake Forest, Durham, Clayton, Chapel Hill, and Morrisville.  Contact the firm for a free initial consultation or submit a confidential new case inquiry here.