Can a dentist sell their dental practice, receive substantial compensation for its goodwill, and then open a competing practice nearby? Can an associate dentist leave one practice and immediately begin working for a competitor? And can a dental practice owner prevent a departing dentist from contacting former patients?
These questions are at the heart of restrictive covenants, particularly non-competition and non-solicitation clauses. On November 3, 2026, the Ontario Court of Appeal released an important decision in F45 Training Canada Limited v. 2685802 Ontario Limited, 2026 ONCA 775, offering valuable guidance on when these restrictions will—and will not—be enforceable.
What Happened in the F45 Case?
The dispute involved an F45 fitness franchise operating in Whitby, Ontario. After approximately five years, the franchisees decided not to renew their agreement. Instead, they arranged to operate a competing fitness business, The Yard Gym, from the same premises. They also contacted existing F45 members, encouraging them to transfer their memberships to the new business.
Their franchise agreement contained a two-year non-competition clause prohibiting involvement in competing fitness businesses within specified geographic areas, including a 10-kilometre radius of F45 locations. It also contained a two-year non-solicitation clause preventing the franchisees from diverting customers to competing establishments.
The lower court found both clauses ambiguous and unenforceable. However, the Ontario Court of Appeal disagreed with that interpretation. After examining the agreement as a whole, the Court concluded that neither clause was ambiguous. Nevertheless, the Court reached two very different conclusions: the non-competition clause was unenforceable because it was excessively broad, while the non-solicitation clause was reasonable and enforceable.
That distinction is particularly important for dentists buying, selling or operating dental practices.
Are Non-Compete Clauses Still Legal in Ontario?
Yes, but their enforceability depends heavily on the circumstances.
The Court of Appeal reaffirmed that restrictive covenants are presumptively invalid because they restrain trade. As Justice van Rensburg explained at paragraph 21: “Restrictive covenants are presumptively invalid irrespective of the type of contract in which they appear because they are in restraint of trade.”
The Court also emphasized that restrictions in employment agreements face greater scrutiny than those negotiated in connection with business sales. This distinction matters enormously in dentistry.
Under section 67.2 of Ontario’s Employment Standards Act, 2000, most non-competition agreements entered into with employees on or after October 25, 2021 are prohibited and void, subject to statutory exceptions, including certain executives and qualifying business-sale arrangements. Consequently, a dental practice generally cannot enforce a conventional post-employment non-compete against an employed associate dentist merely because the associate signed it.
However, non-compete clauses negotiated as part of a genuine dental practice sale can remain enforceable, provided they reasonably protect the goodwill and other legitimate business interests acquired by the purchaser.
Why Did the Court Reject the Non-Compete?
The F45 agreement prohibited the former franchisees from participating in numerous fitness-related activities, including yoga, dance classes, martial arts and other exercise programs.The Court determined that these restrictions extended far beyond what was necessary to protect F45’s legitimate commercial interests. At paragraph 54, Justice van Rensburg concluded: “the non-competition clause is unenforceable because it is broader than necessary to reasonably protect the legitimate proprietary interests of the appellant.”
For dental practice purchasers, the lesson is straightforward: purchasing goodwill does not automatically entitle a buyer to prevent the selling dentist from engaging in every conceivable dentistry-related activity. A restriction should be tailored to the particular practice, its geographic patient market, the nature of the prohibited activities and the legitimate goodwill requiring protection.
A covenant preventing a selling dentist from establishing a directly competing general dental practice within a reasonable geographic area may be defensible. A provision prohibiting that dentist from participating in virtually any dental-related business, regardless of whether it competes with the purchased practice, presents substantially greater enforceability concerns. Importantly, the Court did not establish a universally acceptable duration or geographic radius. Reasonableness remains a fact-specific assessment.
Why Was the Non-Solicitation Clause Enforceable?
Although F45 could not prevent the franchisees from competing altogether, it could prevent them from improperly diverting customers. The franchise agreement expressly protected F45’s goodwill and customer information. The former franchisees had contacted existing members and offered incentives to move their memberships to the competing business.
At paragraph 55, the Court reiterated that: “a non-solicitation clause – suitably restrained in temporal and spatial terms – is more likely to represent a reasonable balance of the competing interests than is a non-competition clause.”
The Court upheld the non-solicitation clause and found that the franchisees had breached it. The extent of the breach and the appropriate remedy were sent back to the Superior Court for determination.
For dental practice owners, this highlights the importance of properly drafted patient non-solicitation and confidentiality provisions. These protections may be more defensible than broad restrictions against competition, although they must also respect patients’ freedom to choose their dentist and applicable professional obligations.
What Should Dentists Do in 2026?
Dentists should distinguish carefully between selling a dental practice, hiring an associate and protecting an existing patient base.
When purchasing a practice, the buyer should ensure that any non-competition clause is proportionate to the goodwill being acquired. When engaging associate dentists, practice owners should recognize Ontario’s statutory restrictions on employee non-competes and prioritize appropriately drafted non-solicitation and confidentiality provisions. When selling a practice, dentists should understand precisely which professional activities they are agreeing to restrict after closing.
The Court’s message is clear: a restrictive covenant must protect a legitimate business interest without unnecessarily restricting lawful competition.
For dentists, the question is no longer simply whether a non-compete clause appears in a signed agreement. The real question is whether that clause is legally permitted, commercially justified and no broader than reasonably necessary.
F45 Training Canada Limited v. 2685802 Ontario Limited, 2026 ONCA 775, confirms that while non-compete clauses are not universally prohibited in Ontario, even commercially negotiated restrictions can fail when they go too far.
At DMC, we help dentists structure dental practice purchases and sales, negotiate associate agreements, and draft restrictive covenants designed to protect practice goodwill while respecting Ontario law.
