5 Year Non Compete Agreement?

In 1993 I spent almost a year fighting a NC + $20k in legal bills. My former employer eventually dropped the suit because the realized they lacked the evidence to prove their case. The suit was dismissed with prejudice.

That same year I lost around $70k in commissions due to fighting a legal battle which was a major distraction to production.

Folks that tell you not to worry about a NC because "it won't hold up in court" have no idea the cost of fighting one unless they have been through it themselves.
 
cador said:
With all due respect David, as I know your well respected here. But I've read alot your posts dissing Non-Competes (as you should, cause they suck for the agents that get conned into signing them), and listened to several of your youtube video's dissing both Non-Competes and FMO's that do not release (what good are releases if you signed a 5 yr N-C?). But how can you diss Non-Competes so much and be a part of an organization, 360 Ins.Group, that has a FIVE YEAR Non-Compete, more stringent than the one posted above, imo?
I know the contract with the N-C wording is ONLY required with 360 if marketing support is desired (providing funds for DM based on production). Most FMO's I talked to provide some type of support (same deal, providing funds to use for DM etc., based on production and/or close ratios), and without any type of Contract or Non-Compete to sign.
Click to expand...

Hey Cador, thanks for the comment.

In case someone else reads this in the future, Cador's commentary is specifically speaking only to the optional Medicare subsidy program we offer in my agency, not the final expense program, where I release agents upon request (as long as they don't owe me chargeback money)

Here's where I stand on this:

I can't account for what other Medicare agencies do, but I think it's a poor business decision to commit tens of thousands of dollars in lead money to an agent, take a loss for potentially several years, and not have a multi-year commitment to do their Medicare business with us. Mind you our agents are fully vested, paid directly from the carrier, and are paid at full commission on this program, too.

For example, if an agent decides to move agencies if not committed contractually, we potentially risk losing a large block of business we helped pay out of pocket for via lead subsidization.

As has been demonstrated many times throughout the years in this forum and elsewhere, Medicare Advantage carriers come and go, and plans held in high regard exit the marketplace. If said agent moved from us and rolled that block of business over via the other agency, we lose all of that long-term upside we paid for. Not an intelligent business move.

Like the Medicare agent, our upside is years down the road, and that risk is too much to swallow.

Again, walk in our shoes. I have several agents who pay nothing for their leads because they are closing 500 to 800 Medicare Advantage applications annually, that we originally invested six-figures plus into.

How would you feel about that much money in play without having the security of the agents' commitment?

Additionally, my commentary earlier was regarding a baseless non-compete clause that offered nothing substantial in return other than a livelihood elimination.

At least in our program the agent gets the potential for tens - if not hundreds - of thousands of dollars of lead subsidies in return, and the ability to get through that vital one to two year period a bit easier when cash flow is lowest. A better deal, for sure.

Thanks again for your comment. If anyone is interested in speaking to me more about how our Medicare program works, reach out to me here. I'm happy to address any questions or concerns that you have.
 
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As @Rearden shows, he's putting money out of pocket for expenses to justify the additional time on a non-compete. Makes perfect business sense, especially if the agent gets a full or substantial commission for doing the work.

Somebody has to be paid and some ways to recap expenses paid out of pocket.

At least, that's fully justifiable.

As is signing bonuses from large broker/dealers to move clients and teams over from one firm to another... they'd have a minimum production and time commitment required.

But for the OP's original post... unless there's some substantial consideration in play (consideration = money), that guy is smoking something and I'd just run.
 
DHK said:
As @Rearden shows, he's putting money out of pocket for expenses to justify the additional time on a non-compete. Makes perfect business sense, especially if the agent gets a full or substantial commission for doing the work.

Somebody has to be paid and some ways to recap expenses paid out of pocket.

At least, that's fully justifiable.

As is signing bonuses from large broker/dealers to move clients and teams over from one firm to another... they'd have a minimum production and time commitment required.

But for the OP's original post... unless there's some substantial consideration in play (consideration = money), that guy is smoking something and I'd just run.
Click to expand...

5 years is still way out of the industry norm. That's the part that wouldn't hold up in court. Even David is saying so. So why would an IMO/FMO put that in place knowing that it isn't worth the paper it's written on? Is this just playing on the ignorance of others?

Of course, we all know that an agent taking it to court would have to come up with the money to defend. Maybe that's the part they are counting on.
 
Todd King said:
5 years is still way out of the industry norm. That's the part that wouldn't hold up in court. Even David is saying so. So why would an IMO/FMO put that in place knowing that it isn't worth the paper it's written on? Is this just playing on the ignorance of others?

Of course, we all know that an agent taking it to court would have to come up with the money to defend. Maybe that's the part they are counting on.
Click to expand...
Sounds as if they read, "Winning through Fear"...:radar:
 
Todd King said:
So why would an IMO/FMO put that in place knowing that it isn't worth the paper it's written on? Is this just playing on the ignorance of others?.
Click to expand...

I think it's just crazy, why would they want to keep a person from making a living, and for 5 yrs? It's a one-sided contract no doubt, gives them ALL the power, they can change commissions, take away any marketing assistance, lose carriers, anything THEY WANT really cause you can't go anywhere else, or make a living, atleast in your profession your trained in.
Suck it up and take it chump, lol!
I'm going through that now with a Non-Solicit in the P & C business, but atleast I can leave them and continue on in my own profession (as they make change after change to our contract, taking $ out of our pocket each time) cause it's doesn't keep me from making a living, just staying away from the clients. No way would I sign a NC, even for a year.
And.....atleast be upfront about it if you have one. I know with David we were 2/3 mths into it before the N-C came up. We talked about the MA marketing assistance (different than it really is) but didn't bring up the NC at all, till I talked to Matt, after I had contracted with both MA and FE carriers and was ready to sell. Now I get to, and am currently dealing with releases and the big mess that goes along with that, even though I had not written one piece of business with anyone.
 
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