Non-Solicit and Non-Compete

Also called non-solicitation clause, restrictive covenant, non-compete

Post-termination restrictions on soliciting merchants or competing, which Florida enforces if reasonable and tied to a legitimate business interest.

What it is

Restrictive covenants in payments contracts come in three flavors that are frequently conflated. A non-solicit restricts approaching specific merchants, usually those in the portfolio. A non-compete restricts working in the industry or territory at all. A no-hire or employee non-solicit restricts recruiting the counterparty's people or sub-agents. Florida enforces reasonable restrictive covenants under its restrictive covenant statute, Fla. Stat. 542.335, which requires the covenant to be in writing, supported by a legitimate business interest, and reasonable in time, area and line of business. Florida courts apply presumptions about reasonable duration that differ depending on whether the restricted party is a former employee, a distributor or agent, or the seller of a business. Anyone relying on this should read the current statute text and talk to a Florida attorney, because application is fact-specific and the analysis differs materially by category. In practice, the realistic negotiation for an agent is to narrow rather than eliminate: limit the restriction to merchants actually in the portfolio rather than any merchant in the territory, limit duration to twelve to twenty-four months, and reject any clause that prevents you from selling merchant services generally. On your own paper, going downstream to sub-agents, a twenty-four month non-solicit covering both your merchants and your other sub-agents is standard and defensible.

Why it matters to your business

If you are signing an agent agreement, understand exactly what you are restricted from doing after it ends, and for how long. Being restricted from soliciting merchants you boarded is normal. Being restricted from working in payments at all is not, and it is negotiable. If you are a merchant, restrictive covenants explain something you may have experienced: the rep you liked disappeared, and nobody replaced them. Where the covenant is broad and the residuals do not vest, agents leave the industry rather than take their book with them. This is education, not legal advice. Restrictive covenants are governed by Florida statute and fact-specific case law; have a Florida attorney review any covenant before you sign it.

Where it gets contested

Restrictive covenant law has been in motion nationally, with regulatory efforts to restrict non-competes generating litigation and uncertainty at the federal level. Florida remains a state that enforces reasonable covenants by statute, which makes it comparatively predictable, and that predictability cuts both ways depending on which side of the clause you are on. The payments-specific fight is about scope creep. A clause that begins as protecting a merchant portfolio often extends to prohibiting the agent from working in the industry, which is a different thing entirely. Courts assess legitimate business interest, and a portfolio is more obviously protectable than a general interest in avoiding competition. What is unresolved for small operators is practical rather than doctrinal. Litigating a covenant costs more than most solo agents can absorb, so the operative question is usually not whether a clause is enforceable but whether the counterparty will spend money enforcing it. That is an unsatisfying answer and an honest one.

How to check it yourself

Find the restrictive covenant in your agreement and identify three elements: what activity is restricted, for how long, and over what geography or set of merchants. If the restriction covers merchants you never touched, or the industry generally, raise it before signing.

Receipts

Claims above that are checkable, with where to check them. Published so you do not have to take anyone's word for it.

ISO and agent agreements including restrictive covenants are an established payments law practice area
globallegallawfirm.com ↗
Agent agreement structure, including terminability and buyout provisions, materially affects portfolio value and deal completion
greensheet.com ↗
Channel conflict between overlapping agents and brands is treated as a governance and control failure
greensheet.com ↗