There is a reasonable scope and duration for a noncompete agreement. For instance, not that I would actually do this, but if I were to achieve appropriate rank, and my instructor did not require a noncompete agreement from me, I could actually open a dojo across the same small town, and theoretically bankrupt him. Wouldn't actually happen, as he'd be a 7th or 8th black by that time. However, when one of your students goes for black belt, a noncompete isn't a bad idea if you don't trust the student implicitly with your business. How do you know he/she won't just sever ties and move across town, possibly taking a large enough chunk of your students with him/her.