Specialized Vehicle Solutions – a site that displays some of the finest exotic and vintage vehicles around – knows that the world of rare and collectible cars is one of the most specialized and exclusive industries in the world. Trade in such high-value cars, and you need to be aware of every single piece of legislation that can affect your business, such as the legal landscape surrounding noncompete agreements. And you need to be able to communicate the right information to your clients.
Noncompete agreements are some of the most common contracts among car dealerships throughout the state of Florida. When talking to dealerships, and sometimes to their private collectors, you may inadvertently share trade secrets that you learned from another dealer that you used to work with. And in such situations, there are laws surrounding the use of non-compete clauses that prevent you or your employees from sharing “sensitive” information. In general, Florida noncompete clauses are said to last for “reasonable” amounts of time. This typically means 2 years, at most, but those periods vary depending on the job or profession. You may also be limited on whether you can negotiate the terms of a noncompete agreement Florida dealers sign.
There are many challenges facing car dealers who specialize in rare vehicles, such as Lamborghinis, Aston Martins, Maseratis, and Bugattis, just to name a few. These cars are rare and exotic, and in many cases, there is only one available for sale. This puts a lot of pressure not only on the dealerships that buy these vehicles to sell them but on the actual car brokers or collectors looking to buy them. Restricted distribution channels might mean that two people are allowed to sell the vehicle of choice – and with limited supply comes an increased price, in many cases.
If you are a dealer of such “specialty commodities” (as the State of Florida so diligently describes them in their noncompete agreements), you may be tempted to enter into a noncompete agreement with that broker that prevents them from working with anyone else. That might be OK with the dealer, but it puts the buyer in the challenging position of having to choose whether to work with this particular dealership or look elsewhere. To put it plainly, the restrictive terms are unreasonable. When dealers use their “specialty knowledge” to gain the upper hand in a noncompete agreement, this might not only be illegal and unethical as it relates to Florida law but it hits close to home with local relationships, too. In that way, it can impact the financial bottom-line through lost relationships and future sales.
This is what makes bringing an experienced legal team on board essential for any organization that specializes in the buying and selling of exotic vehicles. This team can help you determine what types of restrictions are reasonable and then ensure that they are appropriately documented in a legally binding way. But remember: you cannot change an employee’s existing noncompete agreement Florida law rules go and any attempt to “bend the rules” might result in a loss of business. You also cannot change the terms of such agreements for other individuals, such as customers or clients, so it is important to be clear and open about your policies.
A noncompete agreement that Florida law will enforce may have its limits in that it cannot restrict the employee’s ability to make a living in the industry. Further, the non-compete should not violate any anti-trust laws.
In some cases, courts have ruled against noncompete agreements that have attempted to legally restrict the ability of a buyer to purchase a car. That said, your dealership may be restricted from selling to anyone else for a certain period of time. If this is the case, the agreement must be written to prove that “injury” would be suffered to the business’s “goodwill” or “secrets” if they sold to anyone other than the dealership.
Are you thinking about implementing a noncompete agreement Florida dealers can live with? Before you do, it is important that you know how to negotiate the terms, what you can and cannot include in the agreement, and how to protect your company when the business has transitioned from in-house to an outside buyer.
In the United States, all states have variations on their noncompete laws. However, each state generally allows employers to protect their business from unfair competition by limiting the types of information that can be shared with others. Such limitations include procedures for negotiating the “narrowly tailored” terms, as well as the maximum time period, geographic zones, and “legitimate business interests.” As the legal landscape of noncompete agreements changes, you must continue to stay aware of any limitations imposed by the courts as well as review any changes made to local state laws.