The bill H.205 aims to prohibit noncompete agreements that restrict franchisees from operating their businesses after separating from franchisors, as well as employees from competing with their former employers after their employment ends. It introduces a new chapter, Chapter 153, to Title 9 of the Vermont Statutes, which defines key terms such as "agreement not to compete," "franchise agreement," "franchisee," and "franchisor." The bill states that any agreement not to compete is void and unenforceable, and requires franchisors and employers to notify affected franchisees and employees of this unenforceability through written communication.

Additionally, the bill outlines exceptions to the prohibition on noncompete agreements, such as those related to the sale of business interests, partnership dissolutions, and severance agreements, provided that the limitations are reasonable. It also establishes a wage threshold, stating that the prohibition does not apply to employees earning $100,000 or more annually. The bill mandates that employers must provide prospective employees with the proposed noncompete agreement at the time of the job offer and cannot rescind the offer until three business days after the agreement is received. The act is set to take effect on July 1, 2025.