Non-competition agreements can be an effective tool to protect your business from former employees or business associates that would like to benefit from your hard work in building market share. However, they must be drafted carefully to comply with the law, and even then your business may have to go to court to enforce it.
Earlier this month a company that put on last year’s inaugural Philadelphia Cheesesteak Festival filed suit in Federal court in Philadelphia against one of the promoters of the event, claiming that the promoter was planning to put on his own festival this year in violation of a non-compete agreement it signed. The festival operator alleges that when it began planning the second festival and tried to book the site of last year’s festival (Lincoln Financial Field, home of the Philadelphia Eagles), the site told them it could not do so– allegedly because of the actions of the promoter of last year’s event.
According to the event operator, it hired the promoter to perform marketing services for the inaugural festival, and paid him $25,000 for its services. As part of its contract, the promoter allegedly agreed to not compete with the festival for 5 years, and acknowledged that the name of the festival was the operator’s, not the promoters. However, according to the festival operator, the promoter apparently became unhappy with its share of the cheesesteak and began planning its own competing festival, including booking a site near Lincoln Financial Field contacting companies who worked on the inaugural event in order to promote its own festival.
The suit remains pending, and it is unclear whether there will be two festivals, one or none.
When a company builds a business, it inevitably enlists the assistance of various employees, suppliers, promoters, etc. The last thing a company wants is to have to compete with the same people and companies who learned how to build that business, and were paid to do so. Non-competition agreements are a way to ensure that the information, know-how and contacts vital to sustaining the business remain the property of the business, and not a competitor. Competent legal counsel can help protect these and other interests. Let the others make their own sandwich.