Legal Question in Business Law in New York

Re: Non compete clause

The law differs from state to state, but NY and NJ have very strong laws holding these agreements to be valid and enforeceable. There may be restrictions on enforcement if earning a living is dependent upon ability to compete, which may limit the area of non-competition.

Re: Non compete clause

Under NY law, restrictive covenants are generally disfavored. Where they impair a person's ability to work, the courts will only enforce them if necessary to protect trade secrets or other legitimate business interest, and then, only to the extent reasonable in time and geographic scope.

I think the enforceability in the context of a franchise agreement would depend on the type of business, and the reason for the restraint. For example, if you had a Burger King franchise, and you wanted to sell and work in a fast food restaurant across town, it's hard to imagine what could be a legitimate reason for enforcing a covenant. But if you have a franchise for Mr. Goodwrench, and you want to leave and solicit all the customers you have built up over the years using their good name, then I can see it being enforced . . . at least to the extent of the non-solicitation aspect.