Massachusetts’ Highest Court Upholds Post-Term Non-Compete Clauses

On October 1, 2004, the highest court in Massachusetts, the Supreme Judicial Court, handed down a ruling in an important case for franchisors, Boulanger v. Dunkin’ Donuts Incorporated, 815 N.E. 2d 572 (Mass. 2004).

The case involved a former Dunkin’ Donuts franchisee who had entered into three franchise agreements for the operation of Dunkin’ Donuts franchises in upstate New York. Among other things, each of these agreements gave the franchisee access to, and the right to use, the Dunkin’ Donuts operating system, trade secrets, and business methods. As part of the consideration for these rights, the franchisee agreed to a post-term non-compete clause, under which he agreed that for two years after the termination of his franchise agreements he would not work for a business selling substantially similar products within five miles of any Dunkin’ Donuts location.