Many route deals over-rely on the non-compete and under-use the non-solicit. In practice, a strong non-solicit is often the more enforceable and more commercially relevant restraint.
Non-compete prohibits the seller (or employee) from operating in the restricted business at all within a defined geography and duration. Broad. Powerful. Most attacked in court.
Non-solicit prohibits the seller (or employee) from contacting, soliciting, or accepting business from specific named customers (or all customers of the business as of the closing date). Narrower. Easier to enforce. Less likely to be struck down on overbreadth grounds.
Why non-solicits often outperform non-competes:
- Direct match to the business interest at stake (preserving customer goodwill the buyer paid for).
- Less restrictive on the seller's livelihood, courts find them easier to uphold.
- Survives in states that ban or restrict non-competes (e.g., California, where many non-competes are void but customer non-solicits are sometimes still enforceable in narrow circumstances).
- Easier to monitor and prove violations, if a seller's new venture is servicing accounts that were on the closing-day account list, the breach is concrete.
A robust non-solicit clause should cover:
1. No direct solicitation of any customer on the Closing Date Account List.
2. No acceptance of unsolicited business from those customers, closes the "they came to me" loophole that often guts non-solicits.
3. No solicitation of buyer's employees (e.g., the seller poaches the tech they trained).
4. Definition of "customer", typically tied to a specific list attached as an exhibit; sometimes includes a defined look-back (anyone who was a customer in the 12 months before closing).
5. Term: 5 years is a common standard for sale-of-business non-solicits and is generally defensible.
6. Survival: clause should survive termination of any other agreement (consulting, transition support, etc.).
Confidentiality clause sits alongside both. Should cover:
- Customer list, contact info, billing, gate codes, equipment notes.
- Pricing structure, vendor relationships, supplier discounts.
- Operational processes (SOPs, route designs).
- Indefinite duration (or until information enters public domain through no fault of seller).
The three-clause stack in practice. A typical sale agreement carries all three (non-compete + non-solicit + confidentiality), each independently effective. If a court strikes the non-compete as overbroad, the non-solicit and confidentiality remain. If the non-solicit is challenged on a specific account, the non-compete may still cover broader competition. Layered protection is the discipline.
For employees. In states that restrict employee non-competes, a non-solicit with confidentiality is often the practical default. It protects the customer relationships you care about most without raising the high-bar reasonableness review that non-competes face.
Drafting tip. Define "Customer" precisely. Vague definitions ("anyone who has ever done business with the Company") tend to be reformed or invalidated. Specific definitions tied to the Account List Exhibit hold up.
Standard reminder. Non-solicit and confidentiality enforceability vary by state and circumstance. Use the Template Library starting points only with an attorney's review. We are not lawyers.