Am I able to open another similar store as long as I am outside my 100 mile radius non-compete clause?

Asked over 1 year ago - Gilbert, AZ

I want to open a similar business across the country not near any of his other locations. Is this allowed? The clause states:
Company and its LICENSEE s. The geographical area in which this non-Competition portion of this Licensing agreement is enforceable, is defined as follows: a 100 mile radius from the store location herein agreed upon by both Company and the Licensee, and a 100 mile radius of any other Company store, and (i) all counties in the State of Idaho and Utah , (ii) all other states of the United States of America and (iii) all other countries of the world; provide that, with respect to clauses (ii) and (iii), the Company derives at least five percent (5%) of its gross revenues from such geographic area from such geographic area prior to the date of the termination.

Attorney answers (4)

  1. Robert John Murillo

    Contributor Level 20

    2

    Lawyers agree

    Answered . You need to hire an attorney now. This is not something to guess about. First off, you are misreading the terms. It is not merely 100 mile radius. It includes all other states if a revenue provision is hit.

    Moreover, there are a few wrinkles and complications that need to be explored. This refers to license terms. It may be part of a franchise agreement (putting aside, for now, if this person has followed the franchise rule). Additionally, even assuming you could open, that does not mean that you can violate license or intellectual property rights.

    In short, please hire a local attorney (maybe a franchise attorney) to review this agreement and advise you. Trying to side step licenses and other rights to open a business without having legal advice about the risks and best strategies is a mistake. Also, depending on how this deal was done, you may have some leverage. This is something a good business attorney would figure out quickly. Good luck.

    This answer is for informational purposes only and is not legal advice regarding your question and does not... more
  2. Jeffrey Bruce Gold

    Pro

    Contributor Level 19

    1

    Lawyer agrees

    Answered . I agree with the other poster. This restriction extends well beyond 100 miles. For example, I would venture to say that if the store was a McDonalds, there are very few places that you could open a store. You need to identify the location where you want to move, and then see if it meets the restrictions.

    If you'd like to discuss, please feel free to call. Jeff Gold Gold, Benes, LLP 1854 Bellmore Ave Bellmore,... more
  3. James Juo

    Contributor Level 16

    1

    Lawyer agrees

    Answered . The language you quoted includes other restrictions in addition to the "100 mile" provision. You need to retain an attorney to review the contract and your business plan. The attorney may also need to evaluate the non-compete clause under the appropriate state law. Many states recognize and enforce non-compete agreements but may restrict them to a reasonable time and geographic scope. Some states, such as California, have very severe restrictions on non-compete agreements as a restraint of trade. See, e.g., Edwards v. Arthur Andersen LLP, 44 Cal.4th 937 (2008) (“noncompetition agreements are invalid, even if narrowly drawn, unless they fall within the applicable statutory exceptions").

    This answer is for informational purposes only. It is not intended as specific legal advice regarding your... more
  4. Michael T Millar

    Pro

    Contributor Level 19

    Answered . I agree with Mr. Murillo and Mr. Gold

    If this answer was helpful, please mark it as helpful or as a best answer. This answer is for general education... more

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