Director and Solicitor, Head of Franchising and Commercial Services
Restraint of Trade
A Restraint of Trade clause is often included in a franchise agreement, usually to stop someone from competing or using confidential information.
If a franchise business is sold, the vendor may be restrained from competing with the purchaser. In an employment relationship, an employee may be restrained from using confidential information, trade secrets and trade connections of the franchisor.
A court may choose to enforce the clause, but they will consider several things such as how reasonable the restraint is, the interest of the parties and the interest of the public.
A restraint of trade clause should be carefully drafted to take into account details of the business
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