What Fitness Business Owners Should Know About Non-Compete and Non-Solicitation Agreements

The use of non-compete and non-solicitation agreements are becoming a staple in just about every business.  The fitness industry is no exception.  In fact more and more small fitness businesses are using non-compete agreements when hiring trainers regardless if the trainer is an independent contractor or an employee. 

Now I am by no means a legal expert and would strongly recommend speaking to a lawyer if you have specific questions regarding a non-compete and/or non-solicitation agreement.  So, don’t substitute what I am about to say as legal advice.

Although the two terms non-compete and non-solicitation are often used together they have two distinct meanings.  A non-compete agreement is a contract between employer and employee/IC whereby the employee agrees not to enter into competition with the employer after employment has ended.  The non-complete typically takes effect after employment has ended and will last for a pre-determined time set forth by the employer. The non-solicitation agreement restricts the employee from soliciting (a) employees or (b) customers of the business after departure.

The intent of using the non-complete and non-solicitation is to provide reasonable protection for the business.  When a fitness business owner hires a trainer there is an assumed risk that the business owner takes.  The primary risk is the effort and resources the business has provided the trainer to develop a client base.  If the trainer was to just up a leave and take the clients with them: this could lead to a devastating impact to the business because of the loss of income.  The use of agreements is permitted by the courts in an effort to protect the intellectual rights and any proprietary information the company has provided the trainer.

The use of non-compete and non-solicitation agreements vary by state.  In fact in California the use of non-compete agreements are deemed unenforceable.  However, most courts favor non-solicitation agreements.  Check with your local state laws for additional information.

Also important to note is that the terms of the agreements must be deemed reasonable.  Unfortunately, reasonable is a very loose term and if you end up in court it will be up to the judge to determine what is or isn’t reasonable.  Here is what you need to keep in mind.  The purpose of the agreement(s) is not to prevent the employee from working in their choosing career field and to limit their ability to earn a living.  So although the intent of the agreements are to provide reasonable protection for the business regarding their customers and confidential information, they also provide protection to the employee for his/or right to earn a living.

There is one last point I would like to make; the non-compete and non-solicitation agreements are generally in place for the position and time at which they were signed.  This means if you hire a trainer, and have them sign the agreement(s) and then later promote them to a management position the previous signed agreement(s) may no longer be in effect.  So, error on the side of caution and make sure to have trainers/staff sign a new set of agreements whenever there is a change is positions or status.