Your franchisee is probably more exposed to trade secrets escaping locally than you are. However, you won’t automatically have a signed agreement from a franchisee’s manager, so it’s up to the franchisee to get a signed non-compete. Within the exhibit section of your franchise agreement, we provide the franchisee a non-compete form which can and should be used for their managers. Not all franchise models involve having a manager; they might be hired once the franchisee hits a milestone withing their performance, amount of customers/business being serviced, etc. So, whenever a manager is brought onboard, or a new one is hired, non-competes should be collected. If your franchise model does not involve a hired manager, then this section does not apply to you, but the information is still educational and beneficial.

By requiring non-competes, we’re extending the protection of your intellectual property. You’re going to have your agents perform work for you, but really, they’re all part of this whole greater brand. We want to ensure that you at least have an action against them if they go off the deep end.

If you ever want to be acquired by private equity, having up-to-date non-competes from franchisees’ managers shows that you take your intellectual property seriously.

Best Practice

Be sure to include this topic during initial training. When your field reps visit, while checking brand standards, make sure the franchisee has a file on all key employees and that non-competes are in place.