Post a new topic
    3 Replies Latest reply on Feb 24, 2010 5:06 PM by cschmitt11

    Small business, "Non-Competes and E-commerce"

    jlsmove Wayfarer

      I have been working with a company located in another state as a contractor for services in my home state for the past 4 years. Recently, they shared their plans to grow their business by creating an e-marketplace site, whereby, individual contractors would be prominently displayed for selection by potential customers. The idea here is to get customers to find their site as a resource for finding companies that provide the same types of services that I provide, nationwide. Their role would then become that of a broker/facilitator,earning commissions on customer selections.

      There is a non-compete clause in the new terms and conditions that states " You acknowledge that we expend considerable resources in development of said shall at no time solicit sale of services to customers, or in any way start or participate in the development of a business substantially similar to the business we operate through the website for a period of 2 years after termination of this agreement"

      While I congratulate them for growing their business and feel privelaged that they want me to continue to provide quality services to their clients, I can't help but feel like this clause has the potential to restrict my ability to work in a growth industry, or grow my own business. Its the wording "start or participate" and "substantially similar" that I have a problem with. My business plans are for growth through franchising,but, at some point I will develop a site that supports the franchise network. Their plan seems to follow that of Priceline or Hotwire.

      Does anyone have an opinion on, ecommerce non-competes, or how much I should worry about this clause?
        • Re: Small business, "Non-Competes and E-commerce"
          amspcs Ranger
          Well, here's my two cents. But first, let me state emphatically that I am NOT a lawyer. And a lawyer in your state with expertise in contract law is the ONLY person you should listen to, not.

          That said, I guess they feel that if they spent considerable time, money and efffort in 'making' your business successful (via their investment in the website) , they don't want you to walk off with that knowledge and compete against them. I don' think that's awfully unreasonable, in fact
          two years is a pretty short term---I've seen contracts with much longer terms. Also, if you feel uncomfvortable with two years, you can always negotiate a shorter period with them, at least you can try.



          1 of 1 people found this helpful
            • Re: Small business, "Non-Competes and E-commerce"
              jlsmove Wayfarer
              Thanks. This is my last effort to try and get this one right. I appreciate your input.

              I feel that the part about the website is reasonable as well. My primary concern is not starting a mirror website, but, my ability to grow a business, maybe even within the current structure, without closing the door to opportunities. My sense, and research, is that with their model cannot interfere with my own. I hope they know that I am a business owner first, and a contractor, second. So are alot of the other service providers that will be displayed on their site.

              Do you feel that if they are a marketplace, with multiple vendors, that a website that offers only services provided through licensed, locally owned and operated businesses is in violation of the non-compete?


              I think that I will talk to them about shortening the time,it would make me more comfortable. I just didn't want to raise a red flag. My intent is not to steal business.
                • Re: Small business, "Non-Competes and E-commerce"
                  cschmitt11 Newbie

                  Sometimes it is not advantageous to rely on one's own sense and research. My brother lives in Florida and is a contractor for Attorney services there. I am sure you would see the benefit in speaking to an attorney. I am in Maryland and I know the cost for me here is a tax deductible $47/month which as a business expense is nothing! Let me know if you want, I can put you in touch.