National Clothesline

Somehow, I knew it would happen. I gave a struggling drycleaner advice and a method for starting and building a successful route and in less than a year, it went from zero to above $2,500 a week.

Everyone was happy — management, the driver, even his machinery distributor, since the cleaner was smart to upgrade to new equipment. The plant and his workers were forced to be more organized and efficient (and more profitable). I went so far as to advise putting in effect a contract, assuming it would never be enforced.

All was going well, and then it happened! The new driver decided to talk his brother-in-law into opening a new drycleaning plant and, going into partnership, he ’d bring his new, growing route to the new business, thereby giving this venture a terrific “jump start.”

I advised him when he started the route to make certain the contract had a non-compete clause for the owner ’s protection.

Not surprisingly, the court and judge ruled in favor of the route driver, citing his livelihood would be affected regardless of the contract, since he was the one who acquired, solicited and serviced these new accounts.

The driver somehow convinced the judge that it was his personality that made the prospective customers deal with him, and not the established drycleaner.

The agreement forbade him to join an existing competitor. But the new plant was never in business previously and was beyond the 25-mile limit in the agreement he signed. Also, he was not changing employers.

The agreement’s protective, restrictive geographic area, set at 25 miles, was ruled by the judge to be unreasonable. Also, the three-year expiration of entering the drycleaning business was not considered.

Each state can be different, but the courts ruled in the driver’s favor and he was awarded the route.

He immediately trained his brother-in-law to operate the original route while he became the inside manager and set up the new plant, plus starting a second route.

Not too surprisingly, his wife was listed as the partner in the new business.

What can an owner do?

What could the owner have done? Can an established drycleaner protect himself for an existing established route? Is every route “fair game” if a driver should decide to go on his own, or under a partnership, “silent” or otherwise?

Fortunately, there is protection, but it has to be carefully worded and spelled out in cases submitted to the court in advance of hiring and ruled on its legality.

For instance, the prospective driver, before hiring, has to make a declaration that he does not know or personally have knowledge of the employer ’s existing customers and that they are the immediate source of drycleaning revenue or of the residences in the geographical assigned territory.

Next, in the course of doing business, the route driver’s duties may consist of soliciting total strangers or acquaintances for the purposes of acquiring accounts.

The accounts cannot be acquired for the purpose of entering the drycleaning business for a specific period, nor can he or she seek employment to another drycleaner.

Here it is important that all commissions paid for the newly acquired accounts should be documented and paid separately, independent of salary.

All advertising paid for the growth of the route and all printing, phone costs and other expenses that are attributed to building of the route should also be recorded.

It is also advisable that a “Thank You” letter be mailed and the account listed to show their trading history, announcement of specials, company news or new services, always with the company name, holiday greetings, etc. The more association with the firm, and not the route driver, the better.

The firm attempted to show the effort that the counter personnel solicited and suggested that their customers ’ drycleaning could be delivered at no extra charge. Any commissions paid to counter personnel for soliciting new route customers should be documented.

All literature distributed by the firm soliciting use of the route service should be documented, also, along with all material for introducing adjoining neighbors to try the service, since the driver was calling and servicing those neighbors.

In general, all expenses, from printing to painting the vehicle and its use to the full extent of its advertising budget, must be listed. All salaries, commissions and bonuses for acquiring new accounts or re-activating former accounts should be documented.

It is also advisable for all accounts to be put on a “charge account” only to prove the association of management, avoid cash handling, and to speed up the route delivery and pick-up service.

The route man emphasized his sales effort and an association that he had established with his local Elks Lodge. He got his firm to remove, dryclean, re-hang the lodges ’ draperies at no charge by permitting an announcement in the monthly newsletter plus a personal introduction and endorsement of the route service to the members.

Many times, the court explained, there is a loss of “trade secrets” by an ex-employee, but the time restraints usually make this information public knowledge.

In this particular case, the ability to solicit drycleaning was deemed common knowledge and not considered a trade secret. It was brought out again that if the original agreement was submitted to the court, it could have been ruled upon, signed, notarized or altered to satisfy the litigant ’s owner/driver prior to employment, and resubmitted or updated on a yearly basis.

What must be established is the management’s ownership and that the route is the drycleaner’s property.

That can only be verified by the complete practice of documented procedures, such as control of supervision, continuous correspondence with customers and advertising — enforced with a mutually documented, fully agreed upon contract.