This past week I had a friend of mine call me and asked me what I thought about Non- Compete Clauses and if he should start using them at his club.
First of all, I’m not a lawyer so I don’t know all of the legal aspects of non-compete clauses but I understand why clubs want to use them.
It might seem like the right thing to do having your staff sign a non-compete agreement.
After all, the last thing you want them to do is build up their clientele, then take all of them to another club in your area or down the street.
My question to my friend was…Is it worth trying to enforce?
Non-compete agreements have been around the tennis industry forever. I’ve heard of some standing up in court, and I’ve heard of some not holding up in court.
Every one of them ends up draining your time, energy, and often times your bank account trying to enforce.
What I want to discuss in this blog isn’t whether or not the non-compete clause will hold up in court; I’m going to discuss whether or not you should have a non-compete agreement for your tennis staff in the first place.
If you have a branded or trademarked product or system that provides you a competitive edge in your community, then some type of nondisclosure or non-compete clause is reasonable and likely important for you to have with your staff.
The problem I see is that a club will try to force all of their staff including the tennis and fitness staff into signing very aggressive non-competes, restricting them from training or teaching in the community again. To me this is a really bad idea for the club and the best pros won’t sign it unless they are forced to and if they do sign it then they are not going to be happy about it. So now you have this great non-compete clause with a bunch of unhappy staff…great idea.
So, let’s say you hire Roger the tennis pro to teach tennis at your club. Twelve months later, something happens and Roger is offered a great opportunity at another club, or maybe your club is struggling and Roger isn’t getting enough hours. What if Roger moves and his commute is now 30 minutes instead of the 10 minutes. Maybe you just don’t like Roger, or he doesn’t like you. Things happen.
Do you, the club owner, want to try to keep Roger from supporting his family? Do you really want to be seen as the bad guy in town?
I totally understand that you don’t want your teaching pros to leave and compete against you. You certainly don’t want them taking their clients with them to the other club.
In my opinion, if you feel the need for a non-compete agreement, keep the agreement specific and non-restrictive but don’t make it so strict that they can’t make a living.
For example, have your contract prohibit the pro from pursuing or recruiting their clients or members of your facility. Instead of forbidding them to work with any club in town, prohibit them from working with one specific direct competitor. You can prohibit them from recruiting any of your pros and other staff so you don’t have two or three pros leaving at the same time. You can also prohibit them from revealing or using any information they learned during their time with your business, information that would not be otherwise publicly accessible.
If you insist on putting some geographical or timeline limits in your agreement, try to keep them reasonable. Maybe they can’t work for another club within one to five miles of your facility for three months. Making your staff agree to never teach in the city again is definitely not reasonable. The shorter the duration and the less restrictive the language the more likely the staff will enter into a contract or employed position with your club.
Oftentimes, your part time instructors will work at your location as well as other locations in town. If you don’t want this to happen, you should be ready to get them plenty of students, or provide a working base until they build up their client base.
Here is the thing, if you really don’t want to worry about your staff, make everyone an employee instead of sub-contractors. A full time employee can be prohibited from teaching at other facilities or at clients’ homes, etc. They also cannot refuse lessons, and can be instructed to use specific methods and programs specific to your club. I would rather see full time employees over contract pros at a facility because the club is able to control what is being delivered. I understand that because of what it costs to hire full time pros this isn’t always the case.
With the competition to hire great staff in our industry at its highest it’s ever been, you want to be seen as a great employer so that you can attract the most talented instructors. You don’t want to be known as the club that has the non-compete clause. If you do, then you are never going to attract good staff with that approach.
Like most industries the younger employees will plan to use your club as a stepping stone, and that is expected. For those of you that know me know that is why I liked hiring young pros so they could use our club as a launching point. I always wanted my young staff to have that entrepreneurial spirit. I always wanted my staff to enjoy the time they spent with our club, make it a great experience for them, and I never wanted to burn a bridge and when they decided to leave I was ok with it. In our business attrition and turnover is just a part of what we do.
If you are going to be tough about controlling your staff, you won’t be able attract the best pros, and it won’t take long for the club to get a bad reputation. You need to realize that the industry is too small and word will get out pretty quick. Once the word gets out no one will want to work for you because the non- compete agreement will give you the right to treat them poorly and pay them poorly. Most good pros won’t be willing to take that chance on you or the club. The only pros that you will be able to hire are the ones who can’t work anywhere else.
Instead of worrying about your staff leaving you or hurting your business, you should be focusing on providing the absolute best working environment in the area so they have no reason to leave.
By focusing on keeping them happy it will allow them to focus on their jobs which hopefully will bring in more revenue for the club, it will keep the members happy, and it will provide a better experience for everyone.
If your teaching staff likes and respects you, even if they decide to go somewhere else, they’re likely to do it in a way that doesn’t hurt you or them, and they’ll communicate with you along the way so that you can make the necessary adjustments after they leave. A staff member who respects you is less likely to burn a bridge with you after they have left.
So, my opinion is that it is okay to have a non-compete clause, or at least a non-disclosure agreement in the contract with your pros as long as it is reasonable and doesn’t restrict the staff member. I believe that it is reasonable to have them agree not to recruit their clients or other members at the club to go to with them when they leave. I do believe it is not okay to heavily restrict their opportunities if they decide they want to leave the club.
As I said in the beginning I’m not a lawyer but I am a business owner who understands the business and it’s important that the club and the employee are on the same page when it comes to the hiring of the pro and when the pro decides they want to leave.
That is why every club and teaching pro should have some type of contract which lays out the contract and what is expected of them. The main reason I believe in having a contract is for when they decide they want to leave so everyone understands what is expected of them when they do leave. It just needs to be clear on both sides.