FleetCor Technologies, Inc., global provider of fuel cards and workforce payment products and services to businesses, finds itself in once again hot water, accused in confidential filings in Delaware Court last month of violating the terms of their sales agreement related to their acquisition of Hotel Connections. Hotel Connections, renamed TA Connections by Fleetcor, was founded by Ken Shanley and Fleetcor purchased the company in 2020. While the exact terms of the agreement are confidential, it is known that a lawsuit has been filed by Shanley accusing Fleetcor of violating the non-compete provisions in the agreement.
Shanley, filing as Flagler Holdings VI Beta, Inc., alleges that by breaking their non-compete agreement Airline Accommodations Solutions, LLC and Fleetcor Technologies Operating Company, LLC has committed a serious legal breach with resultant professional and economic consequences to Shanley. Additionally, not only has Shanley personally suffered deleterious effects to his current and future business ventures, but that Fleetcor also forfeits the trust of their current and future customers and business partners 52av.
Non-compete clauses in a business sale
Non-compete agreement clauses are common in business purchase agreements and are most often used to preserve the value of the entity being sold by preventing the Seller from using proprietary or business specific knowledge, expertise, contacts, or customers to go into direct or indirect competition with the Buyer. What is unusual in this situation is that it is the Seller, Flagler Holdings VI Beta, Inc and Ken Shanley, who are claiming breach of contract against the Buyer, Fleetcor Technologies, Inc. for violating the non-compete clause.
The confidential nature of the filing keeps secret the details of the specific accusation, but it is worth noting that violating a non-compete agreement can cause serious and long-term harm resulting in the loss of shareholder value and corporate credibility.
Rookie mistake for Fleetcor?
In this case, it appears Fleetcor may be making an unforced error. Stay tuned for more details.
