In a recent case, an award-winning hairdresser, Hayley Gibson-Forbes was forced to close her newly opened second independent hairdressers, by her former franchisor, Rush Hair.

This case shows a surprising win for hairdressers, Rush Hair Limited, who successfully had their two-year two-mile radius non-competition restrictive covenant enforced.

Hayley, a three-time finalist at the Best Hairdressing Business Awards, thought it was time to end the franchise arrangement and first opened her salon in Surrey. While the first salon caused no issues, when approached to open a second salon, she ran into problems. Hayley had been paid £50,000 on exit by Rush Hair, in exchange for entering into a two-year two-mile radius non-competition restrictive covenant. These covenants restrained Hayley from canvassing, soliciting, enticing or employing certain members of staff.

Despite this, through a company for which Hayley was a director, S J Forbes Limited opened the new salon only 300m from Rush and on the same street. Rush immediately issued a claim in the High Court contending her breach of the covenants.

In Rush Hair Limited v (1) Hayley Gibson-Forbes; (2) S J Forbes Limited [2015], the decision was that you cannot get around the restrictions by doing the acts which are restricted using a company i.e. indirectly. To allow this would risk everyone entering into restrictions and then arguing that they didn’t do anything wrong, when they have done so after setting up a company and using it to get around it.

Non-compete covenants prevent employees from working in competition with a business and is key where an employee working in the same area, doing the same type of work could be detrimental to the company.

Non-solicitation covenants are also key, particularly where employees have heavy dealings with clients/customers of the business, it is key to ensure protection against employees taking contacts with whom they have built relationships with.

On first thought, a two-year two-mile radius non-competition restrictive covenant against a hairdresser seems too restricting and unenforceable. Restrictive covenants are well-known for needing to be modest in geographical area and limited as to the type of work and duration. However, this case shows that for the legitimate protection of a business, particularly its key members of staff and key clients/customers, it is crucial. This case is important in giving solicitors, but also businesses, an indication of what length of time is permitted when drafting restricted covenants.
For further information, please contact Koichiro Nakada – Head of Japan Business Group (koichiro.nakada@lewissilkin.com) and Yoko Nakada - Senior Associate, Deputy Head of Japan Business Group (yoko.nakada@lewissilkin.com).
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