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TexLaw, Lawyer
Category: Employment Law
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Experience:  Contracts, Wrongful termination and discrimination
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I am a veterinarian in Arizona that owns a Charter Hospital

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I am a veterinarian in Arizona that owns a Charter Hospital (Franchise from large corporation), and I am looking to sell my interest in the hospital and move on. However, the non-compete clause that the corporation has with me seems over reaching. What are the guidelines to determine if the clause is over reaching and hurting my ability to make a living? The clause states I cannot practice 5 miles from home hospital and 2 miles from all of their other hospitals for 2 years. This corporation has several hospitals near my home and only gives me a small sliver of land that I can work in.
Submitted: 3 years ago.
Category: Employment Law
Expert:  TexLaw replied 3 years ago.

My name is XXXXX XXXXX I will be assisting you with your legal question.

Arizona law enforces non-compete agreements in general. Limitations on time and geographical scope, such as the limitations in the non-compete which you have cited, indicate that the agreement is most likely enforceable. A non compete is reasonable and enforceable when it protects some legitimate interest of the employer beyond the mere interest in protecting itself from competition such as preventing competitive use, for a time, of information or relationships which pertain peculiarly to the employer and which the employee acquired in the course of the employment. An employer may also have a legitimate interest in having a reasonable amount of time to overcome the former employee's loss, usually by hiring a replacement and giving that replacement time to establish a working relationship.

Accordingly, if there is no legitimate interest that is being protected by the franchisor, then you can challenge the non compete for unreasonableness. However, challenging a provision on this basis is going to be very difficult.

Please let me know if you have any further questions. Please also kindly consider rating my answer positively so that I am credited by the website for my work on your question. Rating positively does not cause an additional charge and does not prevent us from further discussing your questions.

Kind regards,
Customer: replied 3 years ago.
Does it impact the legality of the non-compete if there is no employment opportunity outside of the non compete "zone" within several miles of my residence?
Expert:  TexLaw replied 3 years ago.
Unfortunately not. In fact, the limited distance of the non-compete zone is favored by the law. The type of non-competes which are struck down for geographical limitations are generally those which are "state-wide" or "nation-wide" restrictions.
Customer: replied 3 years ago.
This non-compete is practice wide, and this practice has over 700 hospitals nationwide. It affects me across the United states, but it is certainly more restricting in Arizona because of the high density of hospitals here. What would be my next legal step if I were to find employment within that non compete zone?
Expert:  TexLaw replied 3 years ago.
You have three options:

1. Seek a release from the Franchisor. Sometimes these will simply be agreed to, especially if someone is coming in and buying you out.

2. File a Declaratory Judgment Action in the superior court. This kind of lawsuit asks a simple question, "is the non-compete agreement enforceable or not." It is a limited action and does not cover the broad range of topics in a typical trial.

3. Take the job and roll the dice on whether the franchisor will discover the employment and attempt to enforce the clause. Many times, even though the employer may have an enforceable non-compete agreement, the costs of enforcement outweigh the actual advantage gained by enforcing the clause. This option places the burden and costs of action on the franchisor.
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