A blog post by the New Jersey Law Blog discusses the recent trend of franchisors’ attempts to expand the number of persons that will be covered under the non-competition clause in a franchise agreement. Litigator John MacDonald believes that franchisors must have reasonably limited expectations when seeking to enforce non-competition agreements against franchisee spouses and relatives.
I agree with MacDonald. I have reviewed franchise agreements on behalf of franchisees that sought non-competes against spouses. But if the spouse is not involved in the franchise business I believe it raises serious questions about whether such a non-competition agreement is enforceable. Some franchisors have been willing to take out the clause in negotiations while others have insisted the clause remain in the franchise agreement. It will be interesting to follow this growing trend from franchisors and I would attempt to negotiate such a provision out of any franchise agreement you are considering if you are a prospective franchisee.