This post uses hypothetical scenarios for illustrative purposes only. It does not describe any actual client, transaction, or representation, and is not legal advice.
Take a founder on a Florida software sale last year had spent the last decade carefully calibrating his employees’ non-compete agreements. He had a Tampa-based bench of senior engineers and salespeople on twelve-month restrictive covenants, drafted under Florida § 542.335 with the kind of factual record around legitimate business interests that the statute rewards. He had been to the trouble of building it that way because he had read the case law and had decided he wanted enforceable, narrow, defensible covenants rather than the aggressive forms that get knocked down at injunction stage.
When the buyer’s counsel sent over the seller’s non-compete that the founder was being asked to sign personally as part of the merger consideration, the term was five years. The founder pushed back hard. He noted his own employees were on one-year tails and the buyer’s lawyer was being unreasonable. I had to tell him the buyer’s lawyer was not being unreasonable; the buyer’s lawyer was applying the right statute to the right facts, and the right answer for the founder was likely in the three-to-five year range.
Florida’s restrictive-covenant statute applies two different presumptions to two different categories of covenants, and the sale-of-business covenant is treated under a regime that runs years longer than the employee covenant. Founders selling Florida-headquartered businesses in 2026 are getting tripped up by this with some regularity, in part because the Tallahassee-versus-Wilmington choice-of-law conversation has obscured what the home-state statute actually says, and in part because the buyer-side firms drafting the covenant know the answer better than the seller-side firms reviewing it.
What the statute presumes
Florida Statutes § 542.335 is the controlling restrictive-covenant statute for any covenant entered into after July 1, 1996. Subsection (1)(d) sets out reasonableness presumptions that vary by the category of covenant. For covenants between an employer and an employee, agent, or independent contractor, the statute presumes a duration of six months or less is reasonable and a duration of more than two years is unreasonable. For covenants “predicated upon the sale of all or a part of: 1. The assets of a business or professional practice, or 2. The shares of a corporation, or 3. A partnership interest, or 4. A limited liability company membership, or 5. An equity interest, of any other type, in a business or professional practice,” the statute presumes a duration of three years or less is reasonable and a duration of more than seven years is unreasonable. § 542.335(1)(d)(2), Fla. Stat.
The asymmetry is striking when laid out flat. An employee non-compete that runs more than two years carries a statutory presumption that the court applies against the party seeking enforcement. A sale-of-business non-compete that runs three years or less carries the same statutory presumption in favor of the party seeking enforcement. The five-year tail the buyer’s counsel asked for in the founder’s deal sat inside the “rebuttable but not presumed reasonable” middle band — between three and seven years — where the burden is on the founder to demonstrate unreasonableness rather than on the buyer to demonstrate reasonableness. That allocation of the burden is the substantive difference. It is also why most reported decisions on sale-of-business covenants land in the three-to-five year range without much judicial pushback.
The 2025 Florida CHOICE Act — the much-discussed expansion of restrictive-covenant enforceability for covered “high-earner” employees and garden-leave arrangements — supplements § 542.335 rather than replacing it, and it does not touch the sale-of-business durational presumptions in subsection (1)(d)(2). The various physician-non-compete bills that have moved through Tallahassee since 2023 also leave the sale-of-business framework alone. The broader Florida non-compete enforceability picture for 2026 has shifted at the employment edge, but for the run-of-the-mill founder selling a Florida operating business, § 542.335(1)(d)(2) is the only durational presumption that matters, and it reads in 2026 substantively the same way it did when the statute was enacted in 1996.
Why the sale-of-business covenant is treated differently
The doctrinal justification for the longer tail traces back to common-law roots that predate Florida’s statute by several decades. The legitimate-business-interest analysis behind the employee covenant is anchored in protecting investments in training, customer relationships, and trade secrets that the employer made on the employee’s behalf. The legitimate-business-interest analysis behind the sale-of-business covenant is anchored in protecting the goodwill the buyer paid for — a category the statute expressly recognizes in § 542.335(1)(b)(2) as “customer, patient, or client goodwill associated with: an ongoing business or professional practice, by way of trade name, trademark, service mark, or trade dress.” Goodwill, in the M&A context, is meaningfully harder to protect over time than an employer’s training investment is — the goodwill the buyer paid for at closing includes customer relationships, brand recognition, and the seller-founder’s personal reputation in the market, all of which take years to be effectively transferred to the buyer’s organization.
The statute reflects that doctrinal difference by giving the buyer a longer presumed-reasonable window in which to consolidate the goodwill purchase. Florida courts enforcing sale-of-business covenants tend to read the statute the same way it reads on its face: the sale-of-business covenant exists to protect the buyer’s bargain, and the buyer’s bargain includes a reasonable period during which the seller is contractually prevented from using her established goodwill to compete against what she just sold. The cases enforce three-to-five year tails as a matter of course where the consideration is meaningful, the geographic scope is rationally tied to the business sold, and the activity restriction does not exceed the scope of the business the founder operated.
What the buyer’s lawyer is actually after
The buyer is not asking for the long tail to be punitive. The buyer is asking for it because the buyer’s own diligence model assumes that the founder’s customer relationships take twenty-four to thirty-six months to migrate to the buyer’s organization, the founder’s brand-equity contribution to revenue takes a similar window to transfer, and the buyer’s downside in the deal is that the founder re-enters the market at month thirteen and pulls customer relationships back out the door before the goodwill purchase has been realized. The five-year covenant gives the buyer a comfortable cushion against that risk. The three-year covenant gives the buyer the minimum cushion necessary; anything shorter undermines the goodwill component of the purchase price.
That framing matters for the seller-side negotiation because it tells the founder what concessions are achievable and what concessions are not. The duration is hard to move below three years. The geographic scope is moveable — buyers will often agree to limit the covenant to the counties or markets where the business actually operated rather than to a statewide or national scope, particularly when the business is location-anchored. The activity scope is moveable — buyers will often agree to narrow “competition” to the specific lines of business the company operated rather than to broader industry definitions. The 2026 federal overlay on the founder non-compete after the FTC rule and the state patchwork tracks the same pattern at a different altitude: duration is sticky, scope is negotiable.
The carve-out that founders forget to ask for
The most under-asked-for concession in the sale-of-business covenant is the post-employment carve-out. A founder who is rolling into newco or staying on as an employee after closing will typically be asked to sign two restrictive covenants — the sale-of-business covenant attached to the merger consideration, and the employment-related covenant attached to the employment agreement. The two covenants run independently. The sale-of-business covenant runs from closing; the employment covenant runs from termination. The natural drafting question is whether the two tails stack or run concurrently.
Florida courts have not produced a clean rule on this. The drafting solution is to add an explicit concurrency provision — language to the effect that the seller’s post-employment restrictive covenant runs concurrently with, and not in addition to, the unexpired portion of the sale-of-business covenant. Without that language, a founder who stays on as an employee for four years post-closing and signs a one-year employment covenant has effectively extended her sale-of-business covenant from five years to seven years in many readings. The buyer-side firms know this; the seller-side firms sometimes miss it.
The choice-of-law conversation does not save you
A buyer’s counsel proposing a five-year covenant will sometimes pair the proposal with a Delaware choice-of-law clause, on the theory that Delaware’s more permissive restrictive-covenant doctrine will save the longer tail. The conventional founder-side response is to accept the longer tail and the Delaware choice-of-law together. That trade is usually worse for the founder than it looks.
The textual hooks in § 542.335 itself do most of the work here. Subsection (1)(f)(2) bars enforcement of a sale-of-business covenant against the seller unless the person seeking enforcement “was a party to the contract restricting competition,” and subsection (1)(i) directs that the statute’s substantive standards govern Florida public policy questions, with the burdens allocated as the statute prescribes. Florida courts applying the statute have routinely declined to defer to out-of-state choice-of-law clauses that would dilute the (1)(d) presumptions or the statute’s allocation of burdens when the transaction and the parties have a substantial Florida connection. The fact pattern that produced the most-cited Florida Supreme Court choice-of-law decision in commercial settlement — Mazzoni Farms, Inc. v. E.I. DuPont de Nemours & Co., 761 So. 2d 306 (Fla. 2000) — went the other way and enforced a Delaware choice-of-law clause, but the analytical framework it imported from Restatement § 187 leaves room for Florida courts to refuse enforcement where the chosen law contradicts a strong Florida public policy. The Florida non-compete statute is precisely such a policy.
The practical lesson is that a founder selling a Florida business should not trust a Delaware choice-of-law clause to save an unreasonable covenant. The covenant has to be defensible under Florida law standing alone. If it is, the choice-of-law clause is unnecessary. If it is not, the choice-of-law clause is unreliable.
The negotiating posture for 2026 deals
A founder selling a Florida-headquartered business in 2026 should expect the buyer’s counsel to come in at five years on the sale-of-business covenant, should expect three years to be the floor on duration, should fight hardest on the geographic and activity scope where the leverage actually exists, should insist on the post-employment concurrency provision, and should not be lured into accepting a longer tail in exchange for a Delaware choice-of-law clause that will not be honored. The M&A practice sees this play out in roughly the same shape on every Florida operating-business sale, and the founders who come in informed leave the closing dinner with covenants they can live with.
The asymmetry between the employee covenant and the sale-of-business covenant is not unfair. It tracks the doctrinal logic of what the buyer actually purchased. But it does mean the founder cannot use her own employees’ agreements as a benchmark for what to accept on her own. The benchmark is § 542.335(1)(d)(2), and the benchmark runs longer than most founders expect.
If you are selling a Florida-headquartered business and want a second read on the restrictive-covenant terms in the deal, feel free to reach out to my firm manager, Magda, at Magda@montague.law, or fill out our contact form. Mention you read this post.
