Exclusivefocus Summer 2012.pdf - National Association of ...

with those sold by the Company:• With respect to [anyone] to whomAgency or anyone acting on its behalfsold insurance or other products or serviceson behalf of Company and who is acustomer of the Company at the time oftermination of the Agreement;• With respect to any person, company,or organization who is a customer ofthe Company at the time of terminationof this Agreement and whose identitywas discovered as a result of Agency’s …access to confidential information of theCompany; or• From any office or business site locatedwithin one mile of the agency saleslocation ….One Year LimitThe restrictions on competition in thecontract apply for one year from the terminationdate. After that one year, formerAllstate agents may solicit sales fromwhomever they want (including formerAllstate customers) and from whereverthey want (including their former Allstateoffice). Beware, however, of Allstate’sattempts to punish agents for usingan Allstate customer list at any time,even after the one year is up. More onthis later.Will not SolicitThe contract limits solicitation, notsales. If an agent opens an independentagency two miles from her Allstate office,and if a former Allstate customerchooses to seek her out and approachher for a policy, she is free to write thatpolicy. The risk, of course, is that Allstatewill assume the customer transferred dueto improper solicitation and will try tocause the agent grief. Departing agentsneed to decide if they are going to acceptbusiness from former Allstate customerswho approach them, or if they will take acomplete one-year ban on such customerssimply to avoid any headaches withAllstate. This decision is especially importantfor agents still receiving TPP.With Respect to Allstate CustomersThe restriction on solicitation extends,not only to the departing agent’s activeAllstate customers, but to any customersof Allstate at the time of termination ifthe departing agent learned of the prospectivecustomer through Allstate or itsbusiness information. In my experience,I have yet to encounter a terminatingAllstate Agent with information aboutAllstate customers who are not his own.I think it highly unlikely that Allstatewould be able to enforce this restrictionwithout clear proof that the former agentimproperly obtained and used Allstatecustomer data.Notice that the restriction on solicitingbusiness from Allstate customers is notlimited by the one mile radius rule. Forone year following termination, agentsshould avoid solicitations to their formercustomers and to others known by themto be Allstate customers, regardless ofwhere the agent relocates.Or from any BusinessSite within One MileThe one mile rule limits business activitygenerally – not just with respect toAllstate customers – during the one yearfollowing termination. In general, duringthat year, departing agents should notstart a new agency, whether independentor captive, in their former office or withina mile of it “as the crow flies.” Thiscan create a special hardship for agentswho own their Allstate location or have along-term lease.The one mile rule seeks to deter agentsfrom capitalizing on customer familiaritywith the location and the Allstate brand.I question whether Allstate would besuccessful enforcing the restriction if anagent used the existing location solely aswork space for a new agency but withoutsignage or customer access. If I’m makingcold calls, for example, from my cellphone, what difference does it make if Ido it from my former office location orfrom a hotel room on the other side ofthe country?Third party restrictionsIf you look again at sub-section Dabove, you will notice that the R3001Agreement purports to extend the noncompeteto third-party employees of theterminated agent. (In fact, I abridged thelanguage, which also reaches the agency’s“officers, directors, shareholders, members… Key Person or any other personsWRIGHT BEAMER, AttorneysSERVING NAPAA AND THE AGENTS OF ALLSTATE SINCE 2000DIRK A. BEAMER, ATTORNEYEXPERT CONSULTING FOR AGENTS AND THEIR ATTORNEYS ON:• ALLSTATE CORPORATE SECURITY INVESTIGATIONS• BUYING & SELLING BOOKS• ALLSTATE EA AGREEMENTSPH: 248.477.6300WRIGHTBEAMER.COMDBEAMER@WRIGHTBEAMER.COMSummer 2012 Exclusivefocus — 39