Hi. I recently sold a nail salon in Minnesota and was asked to sign a non-compete. It said I, seller has agreed to not open a nail salon within 5 miles radius for 5 years. What terms are enforceable?
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Hi. I recently sold a nail salon in Minnesota and was asked to sign a non-compete. It said I, seller has agreed to not open a nail salon within 5 miles radius for 5 years. What terms are enforceable?
The signed contract said ‘Seller me has
agreed to not open a nail salon within a 5 mile
radius for 5 years’. Can they sue me if my
fianc opens one in his name? Is it enforceable
he opens a nails, massage and waxing salon?
It the contract too broad to be enforceable?
Thank you in advance.
Asked on September 30, 2016 under Business Law, Minnesota
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
1) Yes, a noncompete like the one you describe is enforceable: the terms are reasonable as part of a sale of a business (the selling owners often sign long noncompetes as part of the transaction, so they don't shortly turn around and compete with someone who paid them good money for the business).
2) If your fiance opens such a salon, you will likely be in breach: a court would typically view your finance--someone you are closely involved with--opening a business similar to the one you had as being a competing business with which you are involved and/or is under your control, notwithstanding that is is officially in his name.
The above said, check the terms of the non-compete to see exactly what it says: a non-compete is a contract, and all contracts are enforced according to their plain terms or language.
And, of course, you could open a nail, etc. business 5.5 miles away.
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