Including a noncompete agreement in your employee contracts seems like the logical choice to protect your studio. However, if you scroll through popular dance forums, when it comes to the non-compete agreements for dance studios, owners and industry professionals say these legal documents aren’t all they’re cracked up to be. There are certain problems that come along with noncompete agreements, some of which undermine their effectiveness. If you’re thinking about implementing a noncompete with your instructors, use these tips to guide the process.
Do: Thorough Research
Before you jump on the Internet and start digging for a noncompete template, you’ll want to do a little background research. Find your state’s guidelines for noncompete documents – there might be certain phrases or clauses you have to include for it to be upheld. You should also look into any local court cases about similar circumstances to see the results. Dance Teacher magazine explained that noncompete agreements are notoriously hard to uphold in court, as ruling against a teacher would compromise his or her ability to make a living. Use this research to guide your construction of the document and develop a backup plan to protect your studio.
Don’t: Put All Your Eggs in a Noncompete Basket
While a formal document might give you peace of mind, there are other ways to protect your business from competition. Don’t underestimate the benefits of having loyal students and teachers. Dance Studio Life noted that when you rotate teachers every season or every year, you can prevent them from building up a base of dancers to take to a new studio. Students that have the same teachers for years in a row are more likely to develop loyalty to them. Try to interact with dancers and their parents so they feel connected to your school. Another good tactic is to simply be a good boss. If your instructors value your expertise and enjoy working at your company, they’ll be less inclined to start a rival studio. Inspiring loyalty in your students and teachers is a supplement, or even an alternative, to a noncompete contract.
Do: Seek Professional Help
As with any legal document, it’s best to have a lawyer look it over. If you can afford to have a lawyer draw up the document, it’s definitely a good option. You can probably find a template on the Internet to structure your noncompete around, but unless you’ve been to law school, there’s a good possibility you’ll miss something. Sometimes just a few wrong words can make the document invalid. If you take the time to seek professional advice when you’re drafting the agreement, you may save yourself time, money and headaches in the long run.
Don’t: Rule Out Other Options
There are a couple other legal routes you can pursue to deter the teacher turned competitors. Dance Teacher magazine explained that nonsolicitation clauses are much more likely to be upheld in court, even if the noncompete contract isn’t. These legal clauses keep your former employees from soliciting your students and staff to join their new studio. Nonsolicitation agreements are more likely to be enforced because they’re viewed as an effort to protect your business’ goodwill. Another option is to create a nondisclosure agreement, which prevents former staff from disclosing your proprietary information, like client lists or business history. This type of legal document can be helpful, but keep in mind that instructors can legally use information they remember and public resources to open their studio.