Non-compete when selling a business is one of the last documents you will sign at closing, and one of the first things a serious buyer will ask about. The buyer is paying for your customers, your reputation and your cash flow, and none of that has value if you can open across the street six months later. In South Florida the good news is that the rules are clear, the terms are negotiable, and a well-drafted covenant protects you as much as it protects the buyer. Here is what owners in Palm Beach, Broward and Miami-Dade should understand before the purchase agreement is drafted.

Why every buyer asks for a non-compete

When a buyer acquires a business, most of the price is goodwill: the expectation that customers, referral sources and employees stay after the owner leaves. A non-compete is the buyer’s guarantee that the person best positioned to take that goodwill away will not do so. Lenders care too. SBA lenders and most banks will not fund an acquisition without a signed seller non-compete, because the covenant is part of what secures the loan. Expect the request; the negotiation is over the length, the territory and the activities covered, not whether one exists.

What Florida law says about a non-compete when selling a business

Florida treats a seller’s covenant differently from an employee’s. Under Florida Statute 542.335, a restrictive covenant enforced against the seller of all or part of a business is presumed reasonable in time if it runs three years or less and presumed unreasonable if it runs more than seven years. Those presumptions can be rebutted, but they set the negotiating range: two to five years is where most South Florida deals land, and anything past five years should come with a reason and usually a higher price. The statute also requires the covenant to be in writing, signed by the seller, and supported by a legitimate business interest such as customer goodwill, trade secrets or a specific trade area. Florida’s 2025 CHOICE Act changed the rules for certain high-earning employees; it did not change the sale-of-business framework described here.

Territory: the map matters more than the years

A covenant that bars you from a fifty-mile radius means something very different for a Boca Raton dental practice than for a West Palm Beach e-commerce brand that ships nationwide. Buyers will draft the territory broadly; you should tie it to where the business actually earns its revenue. A landscaping company that serves three ZIP codes does not need a statewide restriction. A B2B service company with clients across Florida might. Get the customer list and revenue map in front of you before you agree to a radius, and remember that the territory has to match the business interest the statute requires.

Scope: define what you are agreeing not to do

The activities restricted should describe the business as sold, not every industry you have ever touched. If you own a restaurant and also invest in commercial real estate, the covenant should not stop you from buying a building. Carve out passive investments, teaching or consulting outside the customer base, and any second business the buyer knows about and did not purchase. Add the non-solicitation of employees and customers as a separate clause with its own term, since buyers often value that more than the geographic restriction. Our guide to preparing your business for due diligence covers the disclosures that make these carve-outs easier to negotiate.

Non-competes, taxes and the purchase price

In an asset sale, part of the price is typically allocated to the non-compete on IRS Form 8594. Money allocated to the covenant is ordinary income to the seller, while money allocated to goodwill is generally taxed as capital gain, so the allocation should be discussed with your CPA before the letter of intent is signed, not after. Buyers may prefer a larger covenant allocation because it is deductible over time; sellers usually want it smaller. We flag this during the business valuation so the number is part of the pricing conversation from the start.

Transition and training are the other half

Most buyers pair the non-compete with a transition period: thirty to ninety days of training and introductions, sometimes a longer paid consulting agreement. Define the hours, the pay and the end date. A seller who agrees to “reasonable assistance” with no cap can find the buyer calling for a year. Keep the covenant and the consulting agreement consistent so that helping the buyer does not accidentally violate the restriction. Our selling a business page walks through how the transition is built into the closing package, and our post on business sale confidentiality explains how these terms are negotiated without alerting staff or competitors.

Plan the non-compete before you go to market

Non-compete when selling a business is not an afterthought. Decide early what you want to do after closing, and we will price and market the business so the covenant fits that plan. John Diaz and the South Florida Business Sales team at KW Business Sales offer a free, confidential business valuation for owners in Palm Beach, Broward and Miami-Dade. Call 844-456-4647. Hablamos español.