Tuesday, January 11, 2011

Non-Compete Agreements and Horse Training: Do They Go Together?

Unless a trainer owns their own facility, or received a very large inheritance, the trainer will provide services out of another’s facility.  Generally, they will lease the grounds from the owner.  In return for using the facility, the trainer will pay the ground’s owner an agreed upon amount each month.  This can be good for both the trainer and the barn owner.  The trainer will make money by training horses at the facility and the barn owner may obtain some new boarders who want their horses trained by the trainer.
However, this can lead to problems for the both the trainer and the barn owner. For example, what happens when the trainer wants to move barns and take boarders with him or her? To prevent this situation, a barn owner may request that the trainer sign a non-compete agreement.  This article will explore what a non-compete agreement is and how it may help or hinder your equine business.
A non-compete agreement is an agreement (or contract) where one party agrees not to provide same or similar services in competition with the other party. For example, a horse trainer using another’s facility may be asked to sign an agreement not to provide training services at another’s barn with a 30 mile radius for a period of three years following the trainer’s departure from the current facility.  
Generally speaking, non-compete agreements are only enforceable if tailored to protect the legitimate interest of the employer.  For a barn owner, this may be problematic because the horse trainer may not be considered an employee.  However, this area of the law varies from state to state, so you should check your state’s laws regarding non-compete agreements.
To be enforceable, the non-compete agreement must be reasonable in its terms and supported by valid consideration.  When a court looks at whether the agreement is reasonable, the court looks at the duration of the agreement; the geographical region of the agreement; and the scope of the agreement.  The courts will balance the employer’s interest, the public’s interest, and the employee’s ability to earn a living. The agreement should be no broader than necessary to ensure that the employer’s legitimate business interest is protected.
So, what does this mean for a barn owner/horse trainer relationship?  First, as a barn owner, you need to decide if you are employing the horse trainer or simply allowing the horse trainer to lease your property.  If the horse trainer will be an employee then a non-compete agreement will be an appropriate tool for you to use to ensure that your legitimate business interest (boarding clients) is protected. 
If you are allowing the horse trainer to rent your facility for a fee, but are not employing the trainer, then you are faced with a tougher situation. You can have the horse trainer sign a non-compete agreement, but I would have to question the agreement’s enforceability, especially in today’s economy.  Instead, you may consider negotiating special terms in the lease agreement.  For example, if you are worried about the horse trainer taking boarders with him or her if she leaves the barn to train in other facility, you may include a non-solicitation provision in the lease agreement.  A non-solicitation provision, if properly drafted, would prevent the horse trainer from soliciting boarders to move with the trainer. 
A non-compete agreement can be a valuable tool for a barn owner.  However, the agreement must be drafted and used appropriately to ensure that the barn owner and the horse trainer are both protected.  To often, these agreements are lop-sided and only protect one party over the other.  If you are considering using a non-compete agreement in your business, I recommend that you contact an attorney to discuss your needs.  There just may be a better way to protect your business. 

2 comments:

  1. Good advice Tracie. Thank you for posting it.

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  2. I appreciate all of the information that you have shared. Thank you for the hard work!
    - non compete lawyer boston

    ReplyDelete