I am a member/owner of a newly formed llc. I have become to suspect that one of the other members is trying to start another company which competes with our llc. our operating agreement which we have all signed prohibits the members from working for or starting other companies. we are currently bidding our first job and i have intercepted emails from vendors in which the member is telling them a different email address which is not our company. He/we have bid this job under our company and all correspondence and bid proposal has been under our company name. this member has recently inquired about the name availability of a company name which happens to match the one he has been giving to vendors. What legal recourse do i have against this member it is obviously misconduct and abuse of his position and the remaining members wish to continue our company only without him.
1 Answer from Attorneys
As a Franchise Attorney I can say this is not a simple question that brings a simple answer. What does your operating agreement say about violations of the noncompete? Even if it's silent, you have a number of remedies that should be investigated. Obtaining a TRO - Temporary Restraining Order - is the first to prevent this member from taking any business from your LLC. The LLC can then bring an action against him for interference with economic advantage, etc. What does the operating agreement say about buyout or buyback of other member interests? Consult with a good business or franchise attorney in your area right away for specific advice.
Mr. Franchise - Kevin B. Murphy, B.S., M.B.A., J.D.
Franchise Foundations, a Professional Corporation
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