According to Investors Business Daily, the beauty industry is expected to grow from $ 68.7 billion in 2012 to $ 81.7 billion in 2017, or a 19.8% increase. This rapidly expanding industry includes several major service platforms including hair, nails, body waxing, facials, and massages. This substantial sales growth will provide countless opportunities for existing businesses to expand and new businesses to enter the market.
New entrants to this market are often existing service providers looking for business opportunities. When at work, these service providers spend a lot of time with their various forms of customer-provider relationships, forming and often developing very strong bonds. These strong relationships are the foundation for both repeat customers and new business referrals for existing companies.
Quality service providers are highly sought after and are of great value to a business owner. One of the biggest challenges spa owners face is when talented service providers decide to venture out on their own and their clients follow them to their new place of business. Another challenge is when a service provider is laid off and their former clients are recruited. How can business owners try to prevent the potentially devastating loss of valuable customers when this situation occurs? Non-competition contracts.
According to Wikipedia, a non-compete clause (often NCC), or non-compete pact (CNC), is a term used in contract law according to which one party (usually an employee) agrees not to enter or start a similar profession. or competing trade against another party (usually the employer). A non-compete clause must have the following characteristics to be valid. A not competing:
1.) It must be reasonable.
2.) It must be extremely detailed.
3.) Comply with the laws of your jurisdiction regarding non-competencies.
4.) It can only belong to the employees, not the booth tenants.
The intention behind these contracts is twofold. First, employers spend a great deal of money training employees and share valuable information about the company related to its competitive advantages. Second, the employee may have entered the realm of where they have been exposed, or helped create what could be considered “intellectual capital” for that company.
Are these contracts ethical? Is it legal to prevent a person from working in their chosen field of expertise? These questions are open to serious debate.
Findlaw.com states that employers have the right to protect their relationships with their clients and their confidential information, but former employees have the right to earn a living. When the employer and the employee have entered into a non-compete agreement, these interests must be balanced.
Unfortunately, many organizations that use non-compete contracts do so to control their employees. These contracts can specify what type of work the person cannot participate in for a period of time, or they can work in that profession, but not within a certain radius of that employer. Employers using these types of contracts may lack the confidence to attract and retain great employees, so they try to hold their employees hostage. (Keeping this type of agreement on the head of an employee should be considered unreasonable and unethical. No company should be able to control its employees.
Reasonable companies seek to create a positive work environment that attracts great talent and finds ways to retain them. If they feel the need to leave, they leave without retaliation.
In his article The Case Against Non-Competition Agreements, Jeff Hayden asks what type of company is best to work for: the company that puts a lot of effort into placing legal and contractual bets on the ground, or the company that puts a lot of money on it. effort in trying to be the employer of choice?
He goes on to add that non-competition tends to backfire on different levels. Do you want to have employees who would like to leave … but don’t because they don’t compete? Do you want employees who are immediately demotivated because they feel that their human capital is not theirs?
People look for opportunities to develop their careers. This could mean working for multiple companies for a shorter period of time and then looking for business opportunities. Allowing employees the freedom to move can create professional relationships within any given industry that ultimately strengthens all parties involved.
Are there times when contracts between employers and employees may be necessary? Yes. In the case of protecting trade secrets or customer information, it is perfectly reasonable to articulate exactly what an employee may disclose.
The best way to prevent the use of non-compete contracts is to take the right path and focus on the quality of the work culture, the environment and the general well-being of the employees. If an employer can do this, employees tend to stay longer and support the long-term goals of the company.
Findlaw.com. Non-compete agreements: general description. Web 8, November. 2015.
http://employment.findlaw.com/hiring-process/non-competition-agreements-overview.html
Hayden, Jeff The Case Against Non-Competition Agreements. Web 8, November. 2015.
http://www.inc.com/jeff-haden/non-competes-could-cause-the-death-of-your-business.html