International Law

Franchise Non Disparagement Clauses

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One of the odder clauses that franchisors demand in a settlement agreement is the non disparagement clause - that the franchisee agree not to disparage, discredit, defame, or say mean things about the franchisor.

I have never understood the content of such a clause - I get defamation, but you don't have to demand that someone not defame you in advance.

But, what does it mean to agree not to disparage or discredit someone if you are only stating the truth?

Can I discredit a criminal by pointing out, truthfully, that they are a criminal?  Do I disparage a franchisor by pointing out that they are taking undisclosed rebates?

Fortunately, the tide is changing about the use of disparagement clauses when breaking up.

Mortimer B. Zuckerman, the publisher of The Daily News, has dropped a requirement that recently laid-off employees agree not to ''disparage, discredit, defame or belittle'' the newspaper in return for severance benefits, company officials said yesterday.

The requirement was rescinded in a letter Monday to dismissed employees by Jeffrey B. Zomper, a vice president at The News.

The provisions have become increasingly common in recent years.

They include a requirement that employees laid off last month at New York Times Digital agree not to ''disparage or encourage or induce others to disparage'' New York Times Digital if they are to receive additional severance and health benefits.

Critics of such provisions said they seemed inconsistent with the First Amendment right to free speech."

The original meaning of "disparage" was to marry beneath one's social standing.  Pretty sure I could agree to that, but not sure that a franchisor would be than interested in my marital standing.

Full post as published by Misleading Advertising Law on February 02, 2009 (boomark / email).