The dispute in Rush Hair Limited v Gibson-Forbes arose out of the sale of two hairdressing salons in Windsor and Maidenhead. The defendant had been operating the businesses since 2008, under a franchise agreement with the claimant, Rush Hair. In 2015 she entered into an agreement for the sale of the business, under which she agreed, for a period of two years from completion, not to employ named individuals who had been working at the salons and also not to compete with the Rush business within a two mile radius around the Windsor and Maidenhead salons.
The defendant claimed that the restrictions were unenforceable on the grounds that they were a restraint of trade. The High Court decided that the covenants should be upheld.
The main factor in this case was that the covenants were contained in a vendor/purchaser agreement – it is clear from the case law that non-compete and non-solicitation restrictions in a sale agreement are more likely to be viewed as reasonable protections of a company's interests than those given by an employee. Rush as purchaser was entitled to protect what it was paying a substantial sum (£50,000) for – the goodwill, including the value of the personal connection between the individual stylists and the regular customers. It also had a legitimate interest in ensuring that the employees of the two salons remained.
It was true that, in the sale negotiations, Rush had greater bargaining power than the defendant (because of the franchise agreement, the business could not realistically be sold to anyone other than Rush), but inequality of bargaining power is only one of the factors to be considered in assessing reasonableness.
Rush did not have to give a "scientific justification" for the selection of two years as the duration for the restriction. Two years was not unreasonable, given the length of covenants upheld in previous vendor/purchaser cases. (The Court commented that there had not been a vendor/purchaser case in which an otherwise reasonable covenant has been held unreasonable on the grounds of duration.) Although the covenants which had met the reasonableness test in employer/employee cases involving hairdressers (whom the judge described as "a rich source of jurisprudence in this area") were for a shorter period of time, the Court re-iterated that a different and less rigorous approach applies to vendor/purchaser covenants.
The geographical reach of the non-compete covenant was also reasonable. Although it prevented the defendant from working in Windsor, where she lived, Rush was entitled to take the view that the detriment it feared (loss of customers) would occur if she relocated to any part of that small town.
Finally, it did not matter that it was the defendant's company that employed one of the people she had agreed not to solicit – the covenant had to be construed as prohibiting her from soliciting any of the named individuals, whether on her own behalf or as agent for someone else.