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UKSolicitorJA
UKSolicitorJA, Solicitor
Category: UK Employment Law
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I have a Franchise contract that relates to specific post codes

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I have a Franchise contract that relates to specific post codes (Key Territory). I have now terminated the arrangement and there are 2 non compete clauses as below. The 1st one is clear as it relates to my allocated post codes but I am unclear about the 2nd one. Please can you clarify what it means? Also are the clauses too wide in their application meaning they would be unreasonable and invalid?

1.the Franchisee shall not within the Key Territory (except as the holder of not more than (5%) five per cent of the shares in any company whose shares are listed or dealt in The Stock Exchange or other recognised public market) and for a period of one year thereafter directly or indirectly be engaged concerned or interested in any capacity whatsoever in a business which carries on a business similar to or which competes with the XXXXX BUSINESS

2.the Franchisee shall not for a period of one year thereafter directly or indirectly be engaged concerned or interested in any capacity whatsoever in a business which is similar to or which competes with the XXXXX BUSINESS within any key territory (other than the Key Territory) served by any member of the XXXXX NETWORK or by the Franchisor itself in the United Kingdom within which a customer of the Franchisee shall have its address or place of business
Hello,

The 2nd clause prohibits a Franchisee from trading in any key territory -which is not the same as the defined term Key Territory- which territory is served by the xxx Network or the Franchisor where one of your customer has a place of business.

You could argue that it is unreasonable and therefore void, but only a court can declare this to be the case.

If you are personally not named as the Franchisee, you may consider trading via another entity/company to get round the restriction.

Hope this helps-

UKSolicitorJA and other UK Employment Law Specialists are ready to help you
Customer: replied 4 years ago.


thanks for the answer, to clarify in this case would the key territory restriction be specific post codes where I have any trading customers?

Yes, that would appear to be so i.e. where you have customers.

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