Franchise Relationship Protected in New Noncompete Ban, Despite Lingering Concerns | Franchise News

The Federal Trade Commission (FTC) has announced a new rule banning non-compete agreements for most workers, except for senior executives. This rule aims to prevent unfair competition among employers. The rule defines senior executives as those earning more than $151,164 in policy-making roles. The regulation excludes non-competes between franchisees and franchisors, seeing the relationship as more akin to that between businesses rather than employer-employee.

Michael Layman from the International Franchise Association commended the FTC for preserving non-competes in contracts between franchisees and franchisors to protect proprietary information. However, concerns remain about the impact on small businesses. Legal experts like Mike Gray and Elliot Ginsburg suggest exploring alternative protections like confidentiality provisions, non-solicitation agreements, and copyright laws.

Despite some reservations about the rule, Gray anticipates legal challenges that could potentially halt its enforcement. The U.S. Chamber of Commerce has already filed a lawsuit against the new FTC rule. If the rule stands, Ginsburg believes it will be beneficial for workers, forcing employers to compete for talent. Employers can still protect their interests through other means like safeguarding trade secrets and intellectual property.

In conclusion, the ban on non-compete agreements for most workers except senior executives is a significant development that will impact employment agreements across various industries. While concerns about its implications persist, legal experts suggest exploring alternative protections to safeguard businesses and employees. Stay tuned as legal challenges may affect the ultimate enforcement of this rule.

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