Non-Compete Clauses

Non-Compete Clauses

Carmen has successfully resolved claims against franchisees accused of violating their in-term covenants not to compete based on their operation of other businesses. With Carmen’s help, no client in that situation has lost his or her franchise.

Regarding post-termination non-competes, Carmen has preserved his clients’ rights to remain in business after the expiration or termination of their franchises by establishing different arguments on the facts of different cases including:

  • That franchisor’s breaches of franchise agreements preclude them from enforcing the non-compete clauses; that franchisors were guilty of “selective enforcement” of their non-competes, making it inequitable to enforce the clause against clients; or that non-competes were overbroad.

He has confronted systems in which the franchisor could not demonstrate the existence of sufficient protectable interests. The franchisees for example were not using the franchisor’s trademarks and received no trade secrets or other valuable confidential information from the franchisor.

In representing a high school class ring distributor, Carmen entered the case after his client had already been held in contempt for violating an injunction enforcing a post-termination non-compete by allegedly having his children conduct business in his stead.  After a federal court evidentiary hearing, the district court not only denied the contempt petition, it also vacated the underlying injunction for lack of proof.

On the franchisor side, Carmen has overcome many of the same arguments:

  • Carmen won at an evidentiary hearing in federal court in Ohio to enforce a non-compete against a franchisee who was seeking to break away, arguing “selective enforcement.” He anticipated that argument and was prepared with evidence from the company president to refute it.
  • In Puerto Rico, Carmen successfully enforced a non-compete on behalf of a franchisor, refuting the ex-franchisee’s claim to have an oral agreement not to enforce it.
  • Carmen has significant experience with alleged restraints of trade in violation of antitrust and related laws.
  • He and his former partners successfully defended a restaurant franchisor against allegations that it unlawfully controlled the resale prices for its units (an alleged tying claim).
  • Carmen and his former partners advised a national pizza franchisor on how to structure its “spice supply” agreement to avoid becoming an unlawful tying arrangement.
  • Carmen successfully obtained price concessions from a local franchisor who was demanding deep discounts for its company-owned stores and rebates for franchisee purchases by threatening claims under the Robinson-Patman Act regarding price discrimination.