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Ending a non-compete clause


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#1 ltle2nice

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Posted 18 February 2013 - 10:38 AM

I live in Wisconsin, and owned a bowling alley/pizza restaurant. Due to health reasons I down sized, pulling the pizza part of the restauraunt out and relocating it else where in our small town, selling the rest of the business. The new owners signed a non-compete clause lasting 10 years (8.5 years still remain), to not make home made/made from ingredient pizzas at this location. The contract also adds "and their successors" to the contract. They have the business for sale and an interested party wants the non-compete clause dropped. They are also willing to pay to have this done. I have been making pizzas for 18 years, with all the recipies being pasted on from owner to owner, est. 35+years now. The pizzas are completely home made, we make our own dough, sauce, cut our own veggies, and shred the mozzerella cheese. My question is is there a good way to calculate a buy out amount?

Sincerely,
Ltle2nice

#2 adjusterjack

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Posted 18 February 2013 - 06:55 PM

There probalby is a good way to determine it but I have no idea what it is. You'd have to hire some sort of business appraiser who could analyze how much profit you could lose if pizza sales resumed at the bowling alley.

You could spend thousands on that kind of expert or you could just throw out a figure that makes you happy and see if it's accepted or whether you can live with the inevitable counter offer.

Before you throw out a figure you also have to determine just how enforceable your non-compete really is. Not because your lawyer wrote it, but by researching case law.

So far I found two articles about Wisconsin appellate decisions about applying "sale of business" rules to non-compete agreements and it seems like Wisconsin courts are a bit undecided about it.

Oh, it's pretty clear that a "sale of business" non-compete will be judged more liberally than an employer-employee non-compete. But 10 years for pizza? My gut says no. Even in your small town I suspect that there are other pizza places competing with you.

If you were to end up in court over it you run the risk that a court might reduce the duration to half that or even less.

Here are the two articles:

http://www.michaelbe...Detail&pub=1763

http://www.natlawrev...ered-part-stock

It's up to you how you want to proceed.

Ask too much and you might end up with nothing. And if your buyer can't sell the business with that kind of non-compete he might find it worth challenging in court which will cost you a fortune to defend.

Might try asking the potential buyer to make an offer and see which way the wind is blowing.

Warning: Legal issues are complicated. Explanations and comments here are simplified and might not fully explain the ramifications of your particular issue. I am not a lawyer. I do not give legal advice. I make comments based on my knowledge and experience. I guarantee nothing. If you act on my comments without the advice of an attorney, you do so at your own risk.


#3 Guest_FindLaw_Amir_*

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Posted 19 February 2013 - 09:41 AM

You may be interested in reading the LawBrain: Non-compete Agreement article as a good resource.




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