For C12 Group franchises in Washington, what is the impact on noncompetition covenants if an employee's earnings do not exceed $100,000 per year?
C12_Group Franchise · 2025 FDDAnswer from 2025 FDD Document
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
Source: Item 23 — RECEIPTS (FDD pages 46–137)
What This Means (2025 FDD)
According to the 2025 FDD, in Washington state, a noncompetition covenant is void and unenforceable against an employee of a C12 Group franchisee if the employee's annualized earnings from the party seeking enforcement do not exceed $100,000 per year. This amount will be adjusted annually for inflation.
This means that C12 Group franchisees in Washington cannot enforce non-compete agreements against employees who earn less than the specified amount. This limitation is imposed by Washington state law (RCW 49.62.020) and any conflicting provisions in the franchise agreement or other documents are considered void and unenforceable.
For prospective C12 Group franchisees in Washington, this has significant implications for managing staff and protecting their business interests. They need to be aware that non-compete agreements have limited enforceability for lower-earning employees. Franchisees should consult with legal counsel to ensure their employment agreements comply with Washington law and to explore alternative methods of protecting their business, such as confidentiality agreements or non-solicitation clauses, which may still be enforceable.
Additionally, the FDD states that a noncompetition covenant is void and unenforceable against an independent contractor of a C12 Group 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).