Non-Competes and Strengthening Business Relationships
Strong, well-written non-compete contracts can strengthen your business relationships. Small businesses especially can face challenges when a business partner is unwilling to sign a non-compete. Reluctance to sign a non-compete can result from a failure to understand what the purpose of the provision is, overly-complex or overly broad language, or a belief that signing it will put them out of business if the relationship goes poorly. These problems can be avoided if a competent business lawyer is engaged to prepare a well-drafted non-compete agreement, and if there is a clear understanding between both sides from the beginning.
Communication is vital to establishing the purpose of a non-compete. An effective non-compete agreement is generally used when two people or businesses are entering into a relationship in which information and/or resources will be shared. Because of this sharing, there is a risk that each needs to understand: after the business relationship has ended, the other party could use the information, resources, or relationships obtained during the relationship to compete against the business. Rather than living in uncertainty and fear over what might happen if the relationship is terminated, a non-compete can be employed to protect against those risks.
Most people asked to sign a non-compete agreement will understand the need for and the reasonableness of such an agreement when the purpose is effectively explained. The general purpose of a non-compete agreement should be to protect your business and prevent the other party from then using the benefit of your business relationship to damage your business; the purpose is not to gain a competitive advantage over another business or exclude anyone from the marketplace. Putting a well written, effective non-compete in place can strengthen your business relationships by clarifying what happens after the relationship ends.
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