Non-Compete Agreements When Selling Dental Practice
Non-compete agreements protect the buyer's investment by preventing you from opening a competing practice nearby. This guide covers what to expect, what's reasonable, and how to negotiate terms that work for both parties.
Why Buyers Want Non-Competes
- Protect patient base
- Preserve practice goodwill
- Prevent staff poaching
- Secure transition period
- Validate purchase price
Standard Terms
Geographic Scope
- Typically 3-10 mile radius
- Based on patient draw area
- Urban: Smaller radius (2-5 miles)
- Rural: Larger radius (10-25 miles)
Duration
- Standard: 2-5 years
- 3 years most common
- 5 years for high-value practices
- Varies by state law
Prohibited Activities
- Opening competing practice
- Working for competitor
- Soliciting patients
- Soliciting staff
- Using trade secrets
State Law Variations
Enforceable States (Most)
Non-competes allowed with reasonable restrictions:
- Texas
- Florida
- New York
- Illinois
- Most states
Limited/Restricted States
- California: Generally unenforceable (except sale of business)
- Oklahoma: Limited enforceability
- North Dakota: Restricted
Negotiation Strategies
What You Can Negotiate
- Radius size
- Duration
- Buyout option
- Exceptions (certain procedures)
- Reduced scope for partial sales
Reasonable vs. Unreasonable
| Term | Reasonable | Unreasonable |
|---|---|---|
| Radius | 3-5 miles | 50+ miles |
| Duration | 2-3 years | 10+ years |
| Activities | Dentistry | All healthcare |
Sale of Business Exception
Most states treat practice sale non-competes differently:
- More enforceable than employment non-competes
- Buyers pay for goodwill protection
- Courts more willing to enforce
- Must be tied to sale consideration
Enforcement and Remedies
- Injunctive relief (stop competition)
- Monetary damages
- Liquidated damages clause
- Attorney fee provisions
Conclusion
Non-competes are standard in dental practice sales. Negotiate reasonable terms that protect the buyer without unduly restricting your future options.
Get Legal Guidance
DentalBridge works with dental attorneys who can draft or review non-compete agreements to protect your interests.