Is a non-compete agreement enforceable, if I signed it working for a franchise that my boss broke off from to start his own entity?

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Is a non-compete agreement enforceable, if I signed it working for a franchise that my boss broke off from to start his own entity?

Original company was “X”. It was not sold; it was a franchise that my boss broke off from to start his own company “Y”, with same personnel, services, and client base. My thought is that I signed on to work for a known name-brand company not the one I am getting paid under now. My boss never had me sign any new agreement not to share company information etc.

Asked on November 2, 2010 under Employment Labor Law, Illinois

Answers:

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 10 years ago | Contributor

There is no easy answer; it depends on a combination of (1) what exactly was the language of the non-competition, particularly in regards to the identify of the entity which you signed it with; and (2) what exactly was the nature of the franchise "breaking off" from the larger entity. One could imagine scenarios in which the noncompete is no longer in force, since it was signed with the corporate entity; or because the nature of the business you signed it with has changed so (if your boss has changed what his location does or who it sells to, for example). On the other hand, if you signed it to not compete with this particular location or office, then it presumably would still be in force since that location is still in existence (if it's doing the same work, selling to the same market, etc.) You should take the noncompete to an employment attorney who can review it and your situation.


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