Yes. The California rule against noncompetition agreements has an exception for the sale of a business. The agreement must still be reasonable in place and time; the same town is probably a reasonable place.
I would have a lawyer review the noncompetition agreement as well as every other aspect of the sale.Ask a similar question
I agree with Mr. Eschen and would extend on his point to say that if you are purchasing a business you should have an attorney involved for more than just this particular issue. There are a lot a hidden traps involved in the purchasing of an on-going business. Even taking over a small, inconspicuous business might be walking into a mountain of headaches that the previous own has failed to address (i.e., zoning, taxes, licensing, on-going vendor contracts, etc.). If you are willing to spend money to purchase a business, spend the money to do it right. If you don't it might cost you much more in the future. Good luck.
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My colleagues are correct that non-competes are legal in connection with the sale of a business so that the limitations on time and geography are reasonable (e.g. not the whole world and forever). Having a lawyer and CPA involved in this transaction may cost "a dollar" today but will save you "ten dollars" in the years to come. Good luck with the venture.
The above is general legal and business analysis. It is not "legal advice" but analysis, and different lawyers may analyse this matter differently, especially if there are additional facts not reflected in the question. I am not your attorney until retained by a written retainer agreement signed by both of us. I am only licensed in California. See also avvo.com terms and conditions item 9, incorporated as if it was reprinted here.Ask a similar question
My colleagues' answers are somewhat correct but somewhat misleading.
If the seller were the owner of a legal entity (partnership, LLC or corporation), I would agree with their answers, which refer to the sale of a business. However, you expressly stated that the seller is a sole proprietor. In that situation, the non-compete provision is enforceable only if the individual sells "the goodwill of a business" (please see the post at the link below, which includes a link to the applicable statute).
Accordingly, it is especially important, if you are contemplating such a transaction, that you have a lawyer prepare, and an accountant review, the purchase-and-sale agreement to ensure that it expressly and appropriately identifies and values the goodwill being sold.
This information does not constitute legal advice and does not establish an attorney-client relationship.Ask a similar question
It is possible to buy a business in California that includes a non-compete clause, but the non-complete clause must be narrow and the restrictions must be related to protecting the goodwill of the business. I strongly suggest that you contact a lawyer to help you with this language. It is easy to get this language wrong and then your non-compete will be useless.Ask a similar question