In Washington, what is the minimum annualized earnings threshold for a Card My Yard franchisee's independent contractor for a non-competition covenant to be enforceable?
Card_My_Yard Franchise · 2025 FDDAnswer from 2025 FDD Document
se which unreasonably restrict or limit the statute of limitations period for claims under the Act, rights or remedies under the Act such as the right to a jury trial may not be enforceable.
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- Transfer fees are collectable to the extent they reflect the franchisor's reasonable estimated or actual cost in effecting a transfer.
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- 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
Source: Item 23 — RECEIPTS (FDD pages 84–259)
What This Means (2025 FDD)
According to Card My Yard's 2025 Franchise Disclosure Document, Washington state law impacts the enforceability of non-competition covenants for both employees and independent contractors of a franchisee. Specifically, for an independent contractor, the non-competition covenant is void and unenforceable unless their annualized earnings from the Card My Yard franchisee exceed $250,000 per year. This figure will be adjusted annually for inflation.
This means that if a Card My Yard franchisee in Washington wants to enforce a non-compete agreement against an independent contractor, that contractor must be earning more than $250,000 annually (subject to inflation adjustments). If the contractor's earnings are below this threshold, the non-compete agreement is not legally enforceable under Washington law. This threshold is substantially higher than the threshold for employees, which is $100,000 per year (adjusted for inflation).
This provision is crucial for prospective Card My Yard franchisees in Washington to understand, as it directly affects their ability to protect their business interests through non-compete agreements. Franchisees need to be aware of these earning thresholds when drafting and enforcing such agreements with their independent contractors. Any conflicting terms in the franchise agreement are void and unenforceable in Washington.
It is important to note that these regulations are specific to Washington state and may differ in other states. Franchisees should consult with legal counsel to ensure compliance with all applicable laws and regulations regarding non-competition agreements.