El Pollo Loco Verdict Makes ‘New Law,’ Attorney Says
Author: Beth Ewen
Publication: Franchise Times
Posted on Blog April 21, 2015
Non-competition covenants are commonplace in several types of agreements, including franchise agreements, employment agreements, consulting agreements, independent contractor agreements, management agreements and operating agreements. In Florida, in addition to meeting the requirements set forth in Section 542.335 of the Florida Statutes, it is important that the party wishing to enforce the restrictive covenants expressly specifies in the contract, with no more than one simple sentence, that the restrictive covenants are independent covenants that are independent of any other provision in the contract. When this language in not included in an agreement containing a non-competition clause, the general rule is that the non-competition covenant will be considered a dependent one. In an action to enforce a dependent non-competition covenant, a valid defense to enforcement of the covenant is that the party wishing to enforce the restrictive covenant breached a provision of the agreement. For example, if an employer sues a former employee for breaching a non-competition provision contained in the parties’ employment agreement, which does not specify that the restrictive covenants are independent, the employer’s failure to pay the former employee in breach of the employment agreement will render the non-compete provision unenforceable. The failure of employers, franchisors and others to include one simple sentence in an agreement containing a non-competition provision could be fatal to its enforcement.