Opinion ID: 2792825
Heading Depth: 4
Heading Rank: 2

Heading: Reasonableness of Restriction

Text: We turn next to whether the noncompete agreement in this case was reasonable in its restriction of competition. There is no allegation that the restriction is injurious to the public. We therefore focus our analysis on whether the covenant was reasonable in both space and time such that the restraint imposed 23 Swingle & Co. v. Reynolds, 140 Neb. 693, 695, 1 N.W.2d 307, 309 (1941). 24 See, H & R Block Tax Servs., supra note 1; Presto-X-Company, supra note 22. 25 H & R Block Tax Servs., supra note 1. 26 Id. at 421, 693 N.W.2d at 556. 27 H & R Block Tax Servs., supra note 1. 28 Id. Nebraska Advance Sheets UNLIMITED OPPORTUNITY v. WAADAH 639 Cite as 290 Neb. 629 will be no greater than necessary to achieve its legitimate purpose.29 We conclude that it is not. In order for something to be reasonable in both space and time, it must usually have a territorial restriction.30 For example, a covenant restricting a prospective rent-a-car franchisee from operating in competition anywhere in the western hemisphere for a period of 2 years has been held unreasonable as being a restraint of trade.31 Similarly held unreasonable was the covenant of a franchisee of a tax preparation firm, which covenant did not expressly have any territorial restriction placed upon it.32 In H & R Block Tax Servs., the noncompete clause restrained its franchisees from competing in the business of preparing tax returns within 45 miles of the franchise territory for 1 year following termination of the franchise contract.33 There, we found that such a restriction was reasonable in time and geographic scope because it only prohibited competition for one tax season. Jani-King’s 1-year covenant is quite different from the restriction in H & R Block Tax Servs. Jani-King’s 1-year restraint prohibited the franchisee from operating a “Competing Business” “in any other territory in which a Jani-King franchise operates.” Since Jani-King operates on a multi-state and international basis, on continents as far away as Australia, the restriction from competing in “any . . . territory in which a Jani-King franchise operates” is similar to having no territorial restriction at all. We find that this is unreasonable in geographic scope. And because this 1-year restraint is not severable from the 2-year restraint also presented by this covenant, the entire noncompete agreement is unenforceable. 29 Id. 30 See, e.g., Budget Rent-A-Car Corporation of America v. Fein, 342 F.2d 509 (1965); H & R Block, Inc. v. Lovelace, 208 Kan. 538, 493 P.2d 205 (1972). 31 Budget Rent-A-Car Corporation of America, supra note 30. 32 H & R Block, Inc., supra note 30. 33 H & R Block Tax Servs., supra note 1. Nebraska Advance Sheets 640 290 NEBRASKA REPORTS Because we find that the noncompete covenant is invalid and unenforceable, we affirm the dismissal of Jani-King’s breach of contract and tortious interference claims.