Non-Compete Provision Voided

A federal district court in Georgia ruled that a provision in a franchise agreement barring a former hair salon franchisee from working in “any similar business” for a period of two years was unreasonably restrictive. The provision at issue prohibited the hair salon owner from serving in any capacity “in any business engaged in the sale or rental of products or services the same as or similar to those of the Fantastic Sams System” within a five mile radius of the franchised salon, or within a two and a half mile radius of any other Fantastic Sams location for a period of two years.

While the court agreed with the franchisor that the time and distance restrictions were likely reasonable, it found that the scope of the restriction (i.e., serving in “any other capacity”) was overbroad. Because Georgia’s “blue pencil” law was passed after the non-compete agreement was drafted, the court could not strike through the invalid portion of the clause while maintaining its valid provisions. Thus, the court held that the entire non-compete clause was void.

Fantastic Sams Salons Corp. v. Maxie Enterprises, Inc. and Paul Rubin, M.D., Ga. No. 3:2011-cv-00022, January 24, 2012.

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