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Non-Competition and Non-Solicitation Clauses in Franchise Agreements

Idan Erez | April 4, 2017

I) Non-Competition and Non-Solicitation Clauses: What Are They?

Franchisors often include within their franchise agreements provisions that seek to restrict the ability of the franchisee and the franchisee’s principals to (i) compete with the franchisor and (ii) solicit the franchisor’s employees to compete. Provisions that seek to do the former are known as “non-competition clauses” or “non-competition covenants”; provisions that seek to do the latter are known as “non-solicitation clauses” or “non-solicitation covenants”.