In Washington, what is the minimum annualized earnings threshold for an independent contractor of a Bambu franchisee for a noncompetition covenant to be enforceable?
Bambu Franchise · 2025 FDDAnswer from 2025 FDD Document
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Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceable against an employee, including an employee of a franchisee, unless the employee's earnings from the party seeking enforcement, when annualized, exceed $100,000 per year (an amount that will be adjusted annually for inflation). In addition, a noncompetition covenant is void and unenforceable against an independent contractor of a franchisee under RCW 49.62.030 unless the independent contractor's earnings from the party seeking enforcement, when annualized, exceed $250,000 per year (an amount that will be adjusted annually for inflation). As a res
Source: Item 23 — Receipts (FDD pages 52–209)
What This Means (2025 FDD)
According to Bambu's 2025 Franchise Disclosure Document, a Washington Rider modifies the standard franchise agreement regarding noncompetition covenants. Specifically, for an independent contractor working for a Bambu franchisee, a noncompetition covenant is only enforceable if the independent contractor's annualized earnings from the franchisee exceed $250,000. This threshold will be adjusted annually for inflation. This means that if a Bambu franchisee in Washington wants to enforce a non-compete agreement against an independent contractor, they must ensure that the contractor earns above this specified amount annually.
This provision is based on Washington state law (RCW 49.62.030), which aims to protect workers from overly restrictive non-compete agreements, especially when their earnings are below a certain level. The law recognizes a distinction between employees and independent contractors, setting a higher earnings threshold for independent contractors. This likely reflects a legislative judgment that independent contractors typically possess greater bargaining power or specialized skills, justifying a higher earnings threshold for non-compete enforceability.
For a prospective Bambu franchisee in Washington, this information is crucial for understanding the limitations on non-competition agreements. If the franchisee intends to use independent contractors, they need to be aware that a non-compete agreement is only enforceable if the contractor's earnings surpass the $250,000 threshold (adjusted for inflation). This could impact the franchisee's ability to protect their business interests through non-compete agreements with lower-earning independent contractors. It also means that the franchisee needs to stay updated on the inflation-adjusted threshold each year to ensure compliance with Washington law.