What , if anything, can be done if the seller of the business opened another store within 7 miles of the one that he sold?

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What , if anything, can be done if the seller of the business opened another store within 7 miles of the one that he sold?

My parents bought a deli business last year while the seller said he would be retiring. However, we recently found out that he opened another deli business with a very similar menu 6 miles away. I was wondering if this is something we can pursue legal actions for?

Asked on December 2, 2017 under Business Law, Connecticut

Answers:

M.D., Member, California and New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

Did the seller sign any kind of "non-compete" agreement? That is an agreemnt that restricts their right to operate a competing business within a certain geographical area. If not, then the seller was withing their legal rights to open up this new store. However, if they did have a non-compete which they breached , then your parents have a claim (although since you did not mention one, I assume that such an agreement was not entered into). It's unfortunate that your parent's or their attorney did not have this done when the business was purchased even if the seller said that they were going to retire. People do change their minds. As the saying goes, it's better to be safe than sorry.

SJZ, Member, New York Bar / FreeAdvice Contributing Attorney

Answered 3 years ago | Contributor

It is completely legal, unfortunately, unless the seller had signed a noncompetition agreement as part of the sale which restricted or limited his right to compete (e.g. no competing store within a certain radius or distance). If he did sign a noncompete and is violating it, yoiur parents can sue him for breach (violation) of contract; but without a noncompetition agreement, he could open a competing store where he likes, even right next door.


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