I have little doubt that many of you, at some point in your careers, will have to sign a non-compete agreement. This is a fairly obvious observation since many of you are/will become big time players, and big time players have access to very important information that companies will want to protect. At least that was the traditional use of a non-compete agreement. Over the past six months or so, I've seen a steady stream of articles detailing the small time players, very small time players, signing non-competes. Some examples lend themselves to an obvious explanation, Jimmy Johns for instance, probably utilizes non-competes to better control their work force's bargaining power, as the agreement everyone signs - noted in an AJA piece - is particularly harsh:
For two years, [the non-compete agreement] forbids former employees from working for “any business which delivers more than 10 percent of its revenue” from sandwiches if that business is “within three miles” of a Jimmy John’s store.
That's a pretty dick move on behalf of Jimmy John's; there's nothing their store workers know that any WSO monkey couldn't figure out by watching them make a sandwich or two. But, I'd be surprised if that's why they had such an agreement in place. Jimmy John's seems more clever. However, it appears that there are firms who utilize a non-compete for entry level workers because they actually think their information is worth protecting, as noted by the NYT:
Joe Kahn, Linx’s owner and founder, defended the noncompete that his company uses. “Our intellectual property is the training and fostering of our counselors, which makes for our unique environment,” he said. “It’s much like a tech firm with designers who developed chips: You don’t want those people walking out the door. It’s the same for us.” He called the restriction — no competing camps within 10 miles — very reasonable.
Linx is a summer camp. I challenge you to think of a firm that has less in common with the semiconductor industry.
What do you monkeys think? Has this gone too far? Or where everyone needs to read their employment contract carefully and be prepared to walk?
Is Jimmy Johns REALLY going to waste their resources on some kid that quit his job and now works for a local mom & pop sandwich shop? Do they have some sort of dedicated department for going after high schoolers? Maybe economies of scale come into play here, but I know that my families small-business (restaurant industry) wouldn't bother. In fact, it's not uncommon for an employee to quit (or is fired) and go on to either work for a rival shop or even open one of their own. Franky the main reason my family doesn't go after these people is because they are of no threat: to establish a customer base takes years and stealing menu items or production systems =/= success. Outliers aside—I've come across less than a hand full—the individuals who work these jobs are not exactly type-A, driven, entrepreneurial, or business-savvy. All of which are requisite qualities when opening any sort of enterprise.
Also, let just say someone works for JJ for a few years, masters their whole system, and then attempts to open their own chain. I have no legal background, but I'd venture to say that you'll win in court without any sort of non-compete clause.
Jimmy Johns will go after an ex employee on the basis of a non compete in the small percentage of cases where that makes sense ie where the ex employee died represent a competitive threat.
Who can predict which employees may fall into that category?
Requiring the clause as standard gives JJs to apply it to any employee. That is, they get the option value, which is valuable in a few unpredictable cases.
Proving beach of non compete is easier than proof of theft of intellectual property.
The ex employee May be doing her thing without cashing in on any JJ IP. Having the breach of non compete is a great tool for JJ then as they can sit down the competition easily.
Perfectly rational.
On my first read I found it somewhat comical. On my second read I realized it's a brilliant business plan. It cost them zero dollars to include the non-compete clause in their employee contract yet there's significant upside in certain instances. I highly doubt they'll ever need to exercise their legal right. Although, I still think it's somewhat comical - I'm imagining a room full of douchey lawyers talking about how they're going to go after an 18 year old because he switched minimum wage jobs.
This could easily be challenged in court.
Thread picture 8/10. Would view again.
Worked for a Jimmy John's once about 10 years ago in college. They are super nuts about everything being the exact same from store to store. No joke, you are not allowed to use hot water with bleach to sanitize the dishes. You are only allowed to use cold water with bleach. Some of their policies sound like they were made up by someone who is Jack Nicholson "As Good As It Gets" OCD. Never knew about a non-compete. Doubt that it was enforced.
A great example of problems with NOT having a non-compete, even in the food world is Zaxby's. I worked as a manager in high school for a chicken place called Guthrie's in Alabama. They were pretty successful regionally, but were run by a bunch of 40 year old frat boys chasing tail, playing golf, and smoking weed. They didn't have a non-compete and a few managers left the company and used all of the recipes and concepts to start Zaxby's. Now they are small fries compared to Zaxby's. It helps to know a little about business before you become successful.
Ipsum reiciendis ab consequuntur veritatis ut dolores ut est. Delectus et vel occaecati et est architecto aut velit. Voluptates rerum neque molestiae aliquam. Aut nam ex cumque sed non sed vero consequatur. Quidem quidem laboriosam dolor iusto. Amet fuga sit repellat et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...