Under what circumstances would a portion of the Bft agreement be considered unenforceable?
Bft Franchise · 2025 FDDAnswer from 2025 FDD Document
arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.
A release or waiver of rights executed by a franchisee may not include rights under the Washington Franchise Investment Protection Act or any rule or order thereunder except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act, or rights or remedies under the Act such as a right to a jury trial, may not be enforceable.
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 result, any provisions contained in the franchise agreement or elsewhere that conflict with these limitations are void and unenforceable in Washington.
RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor. As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.
The Franchise Disclosure Document does not waive any liability we may have under the Washington Franchise Investment Protection Act, RCW 19.100, and the rules adopted thereunder.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–66)
What This Means (2025 FDD)
According to Bft's 2025 Franchise Disclosure Document, several circumstances could render portions of the franchise agreement unenforceable, particularly concerning franchisee rights and state-specific laws. In Washington, a release or waiver of rights by a franchisee is unenforceable if it includes rights under the Washington Franchise Investment Protection Act, unless executed as part of a negotiated settlement with independent counsel after the agreement is in effect. Additionally, provisions that unreasonably restrict the statute of limitations for claims or rights under the Act, such as the right to a jury trial, may not be enforceable.
Furthermore, non-competition covenants have specific limitations. In Washington, a noncompetition covenant is void and unenforceable against an employee of a Bft franchisee if the employee's annualized earnings from the party seeking enforcement do not exceed $100,000, with annual adjustments for inflation. For independent contractors of a franchisee, the threshold is $250,000 per year, also adjusted annually for inflation. Any conflicting provisions in the franchise agreement are void and unenforceable in Washington. Bft is also prohibited from restricting a franchisee from soliciting or hiring employees of other Bft franchisees or the franchisor.
In Illinois, any condition that binds a person acquiring a Bft franchise to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. Similarly, in North Dakota, certain parts of provisions waiving punitive damages might not be enforceable under the North Dakota Franchise Investment Law, though Bft intends to enforce the provision to the extent the law allows. These stipulations highlight the importance of franchisees understanding their rights under state laws, as these rights often supersede the standard terms of the franchise agreement.