Will the minimum annualized earnings threshold for noncompetition covenants for Bombs Away franchisee independent contractors in Washington be adjusted?
Bombs_Away Franchise · 2024 FDDAnswer from 2024 FDD Document
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 if they reflect 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 adjust
Source: Item 23 — RECEIPTS (FDD pages 36–117)
What This Means (2024 FDD)
According to Bombs Away's 2024 Franchise Disclosure Document, the minimum annualized earnings threshold for noncompetition covenants for independent contractors of Bombs Away franchisees in Washington is subject to annual adjustments for inflation. Specifically, a noncompetition covenant is void and unenforceable against an independent contractor if their earnings from the party seeking enforcement, when annualized, do not exceed $250,000 per year. This amount will be adjusted annually for inflation. Therefore, the $250,000 threshold is not fixed and will likely change over time due to inflation.
This means that Bombs Away franchisees operating in Washington need to be aware that the enforceability of noncompetition agreements with their independent contractors depends on whether those contractors meet the annually adjusted earnings threshold. If an independent contractor's annualized earnings are below the adjusted threshold, the noncompetition covenant is void and unenforceable. This could impact the franchisee's ability to protect their business interests through non-compete agreements with lower-earning independent contractors.
Prospective Bombs Away franchisees in Washington should monitor the annual adjustments to this earnings threshold to ensure their noncompetition agreements with independent contractors remain enforceable. They should also consult with legal counsel to understand the implications of Washington's noncompetition laws and how they apply to their specific circumstances. This is particularly important for franchisees who rely on independent contractors for a significant portion of their business operations.