What is the minimum annualized earnings threshold for a noncompetition covenant to be enforceable against a Budget franchisee's independent contractor 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, noncompetition covenants in Washington State are subject to specific earnings thresholds for enforcement. For an independent contractor of a Budget franchisee, the noncompetition covenant is void and unenforceable unless the independent contractor's earnings from the party seeking enforcement, when annualized, exceed $250,000 per year. This amount will be adjusted annually for inflation.
This provision is based on RCW 49.62.030, a Washington state law. The FDD explicitly states that any conflicting provisions within the franchise agreement or elsewhere are void and unenforceable in Washington. This ensures that Budget franchisees operating in Washington adhere to the state's regulations regarding noncompetition agreements with independent contractors.
For a prospective Budget franchisee in Washington, this means that any non-compete agreement with an independent contractor is only enforceable if the contractor's annualized earnings are above $250,000, adjusted for inflation. This is a crucial consideration when hiring and contracting with individuals, as it directly impacts the enforceability of any non-compete clauses included in their agreements. Franchisees should consult with legal counsel to ensure their agreements comply with Washington law.