In Washington, is Auntie Annes allowed to restrict a franchisee from soliciting or hiring any employee of another Auntie Annes franchisee?
Auntie_Annes Franchise · 2024 FDDAnswer from 2024 FDD Document
In recognition of the requirements of the Washington Franchise Investment Protection Act, Wash. Rev. Code §§ 19.100.180, the Disclosure Document for Auntie Anne's Franchisor SPV LLC for use in the State of Washington is amended as follows:
If any of the provisions in the Disclosure Document or Franchise Agreement are inconsistent with the relationship provisions of RCW 19.100.180 or other requirements of the Washington Franchise Investment Protection Act, the provisions of the Act will prevail over the inconsistent provisions of the Disclosure Document or Franchise Agreement (as applicable) with regard to any franchise sold in Washington.
In any arbitration involving a franchise purchased in Washington, the arbitration site will be either in Washington or in a place as mutually agreed-on at the time of the arbitration, or as determined by the arbitrator.
A release or waiver of rights signed by a franchisee will not include rights under the Act except when signed with a negotiated settlement after the Franchise Agreement is in effect and where the parties are represented by independent counsel.
Provisions such as those that unreasonably restrict or limit the statute of limitations period for claims under the Act and rights or remedies under the Act, such as a right to a jury trial, may not be enforceable.
The State of Washington has a statute, RCW 19.100.180, that may supersede the Franchise Agreement in your relationship with the franchisor, including the areas of termination and renewal of your franchise.
There also may be court decisions that supersede the Franchise Agreement in your relationship with the franchisor, including the areas of termination and renewal of your franchise.
Source: Item 22 — CONTRACTS (FDD page 106)
What This Means (2024 FDD)
According to Auntie Annes's 2024 Franchise Disclosure Document, the Washington Addendum addresses the relationship between the Franchise Agreement and Washington law. Specifically, it states that if any provisions in the Disclosure Document or Franchise Agreement are inconsistent with the Washington Franchise Investment Protection Act, the provisions of the Act will take precedence. This means that Washington state law will govern the relationship between Auntie Annes and its franchisees in Washington, superseding any conflicting terms in the franchise agreement. The Act may impact areas such as termination and renewal of the franchise.
Additionally, the addendum notes that provisions that unreasonably restrict or limit the statute of limitations period for claims under the Act, as well as rights or remedies under the Act like the right to a jury trial, may not be enforceable. This suggests that Auntie Annes cannot enforce terms that unduly limit a franchisee's rights under Washington law.
However, the document does not explicitly address whether Auntie Annes can restrict a franchisee from soliciting or hiring employees of another franchisee in Washington. Since the FDD states that the Washington Franchise Investment Protection Act will supersede the Franchise Agreement, a prospective franchisee should consult Washington state law, specifically RCW 19.100.180, to determine if such a restriction is permissible under the Act. They should also seek legal counsel to understand how Washington court decisions might affect the enforceability of any such restrictions in the Franchise Agreement.