Best Law Firms | Ranked By Best Lawyers | United States | Franchise law | Tier 1 | 2024

National Leading Franchise Law And Commercial Litigation Firm

Powerhouse Trial Lawyers And Strategic Problem-Solvers In Complex Business Disputes And Transactions

How do non-disparagement clauses work?

On Behalf of | Jun 29, 2021 | Franchise Law |

Contracts between companies and their high-level employees or between franchisors and their franchisees can include a lot of different clauses. One of these is likely to be a non-disparagement clause. This type of clause prohibits the party bound by the agreement from making negative remarks about the company or franchise — which generally helps protect the brand’s name and reputation.

Are clauses like these really enforceable or do they inherently limit free speech?

There’s no law against contracting for your silence

You have every right to willingly enter into a private agreement that calls for your silence when it comes to anything negative about your employer or the franchise. 

Non-disparagement clauses are frequently part of initial contracts (when you start employment or buy into a franchise), when you change positions (particularly if you move up the corporate ladder) and when you leave an organization (in order to get a severance package). Essentially, when you sign an agreement with a non-disparagement clause, you want to make sure that whatever you are getting in return is worth your silence.

It’s important to understand that non-disparagement clauses are generally fairly broad. These clauses normally cover all forms of communication. A person couldn’t rant about an employer on social media or any other platform. Because it’s a restrictive covenant, it must be handled carefully. You need to be very sure of your obligations so that you don’t run afoul of your contract.

Enforcing a non-disparagement agreement starts off with ensuring the agreement will hold up in court. No matter what side of the contract dispute you are on, it’s generally wisest to have an experienced advocate review your contract and help you understand your legal options.