How to figure what a non-compete should be worth for 3 yrs.

I have worked for a company for 6.5 years. When I was hired, I sat with the Pres and CEO and was promised sweat equity ownership..this was a verbal promise and never in writing. They moved me from Colorado to Phoenix to run their operation. One year later, my wife was offered a position w/the company as office mgr. Recently, I pursued a dealership on my own after being told from the owner I would never receive ownership. If I would have received the dealership it would negatively impacted my employer's business. Before, I rec'd an answer on the availabilty of a dealership I was let go and so was my wife. When we came here the company was in the red and over the past 6.5 years we have built this business up. This year, this branch, will net 800,000 - 1,000,000.00. Average profit for this branch over the last 4 years exceeds $700,000 per yr. They have offered me a non-compete for a total of $25,000. The non-compete is for 3 years. My pay was $100,000 a year, company car plus discretionary bonus of $30,000 per yr. for the last 3 years. What would be a fair amount for the non-compete? Also, are there any legal ramifications for firing my wife also.. she did nothing.

1 answer  |  asked Oct 30, 2003 08:53 AM [EST]  |  applies to Arizona

Unlock Non-Compete Agreements: Keys to Escape

Answers (1)

Francis Fanning
Non-compete is worth whatever you decide it is

From the facts you described, it appears that your employer has terminated you and now has no ability to keep you from competing with them. If you intend to compete with them, why would you sign a non-compete agreement? On the other hand, if you do not intend to compete with them, you should ask for as much as they are willing to give in return for a promise that costs you nothing. There is no magic formula to determine what such an agreement is worth. I suppose you could argue that since you were making $100k working in the industry for them, your agreement to leave the industry for three years should be worth $300k, but of course that can easily be refuted by the argument that you can earn some salary doing something else. What will you make if you compete with them? Probably nothing initially, but in three years you could be making much more than they were paying you. And will you succeed in getting the franchise? Your question is asking for information that can only come from a crystal ball. I would make your former employer tell you what it is worth to get you out of their hair.
As for your wife, I assume she was an at-will employee, so the employer could fire her without a reason. If they needed a reason, I assume they would say they didn't want the wife of a potential competitor working for them. There doesn't seem to be anything illegal in that.

posted by Francis Fanning  |  Oct 30, 2003 3:44 PM [EST]

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