Non-Compete Agreements: Protecting Your Business in a Competitive Market

What Does a Non-Compete Clause Cover?

A non-compete clause is a contract between an employer and an employee. The employee agrees not to start or join a competing business for a set time and within a certain area after leaving the company. These agreements can protect a variety of assets, including:

• Trade secrets (like a restaurant’s secret spice recipe)
• Proprietary business methods
• Coveted client rosters

For example, if your business relies on a unique recipe or process, you don’t want that advantage ending up with a competitor. Tennessee law recognizes trade secrets and allows businesses to safeguard them through non-compete agreements (see TCA § 47-25-1702(4)).

Who Uses Non-Compete Agreements?

Non-compete agreements are especially common in industries where:

1. Employees have specialized skills or knowledge
2. Business secrets are key to success
3. The client list is highly valuable

By using these agreements, you protect your investment in people, processes, and relationships.

What Happens If Someone Violates a Non-Compete?

When an employee breaks a non-compete agreement, the company can take legal action. Courts may respond by awarding monetary damages, granting an injunction to stop the employee from working for a competitor, or requiring the return of confidential information.

Prime Example: Chicken Tender Wars
Consider the recent dispute between two of Nashville’s favorite chicken spots, Otter’s Chicken and McDougal’s Chicken. An Otter’s employee with ownership and insider knowledge left and allegedly shared secrets with McDougal’s. As a result, the court sided with Otter’s, granting an injunction and ordering all information returned.

How Do I Create a Non-Compete Agreement?

Protecting your business starts with the right legal language. If you’re ready to safeguard your secrets and your future, Collins Legal can draft a non-compete agreement tailored to your needs.