What is the minimum annualized earnings threshold for a noncompetition covenant to be enforceable against a Budget franchisee's employee in Washington?
Budget Franchise · 2025 FDDAnswer from 2025 FDD Document
l pre-opening obligations and until Franchisee's Franchised Business is open to the public.
In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW will prevail.
RCW 19.100.180 may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. There may also be court decisions which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.
In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time
Source: Item 23 — RECEIPTS (FDD pages 80–426)
What This Means (2025 FDD)
According to Budget's 2025 Franchise Disclosure Document, in Washington, a noncompetition covenant is only enforceable against an employee of a Budget franchisee if the employee's annualized earnings exceed $100,000. This figure will be adjusted annually for inflation. This is based on RCW 49.62.020. For independent contractors of a Budget franchisee, the earnings threshold is higher, at $250,000 per year, also adjusted for inflation, as per RCW 49.62.030.
This means that if a Budget franchisee in Washington wants to enforce a non-compete agreement against an employee, that employee must be earning at least $100,000 annually. If the employee earns less than this amount, the non-compete agreement is considered void and unenforceable under Washington state law. The same principle applies to independent contractors, but with the higher earnings threshold of $250,000.
This provision protects lower-earning employees and independent contractors from being unduly restricted in their future employment opportunities. It also ensures that Budget's franchise agreement complies with Washington state law, as any conflicting provisions would be deemed void and unenforceable. Prospective Budget franchisees in Washington should be aware of these limitations on non-competition covenants when hiring employees or engaging independent contractors.