What is the minimum annualized earnings threshold for a Carls Jr. franchisee independent contractor in Washington for a noncompetition covenant to be enforceable?
Carls_Jr Franchise · 2025 FDDAnswer from 2025 FDD Document
e agreement or related agreements require a franchisee to reimburse the franchisor for court costs or expenses, including attorneys' fees, such provision applies only if the franchisor is the prevailing party in any judicial or arbitration proceeding.
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- Noncompetition Covenants. 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
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 75)
What This Means (2025 FDD)
According to the 2025 Carls Jr. Franchise Disclosure Document, in Washington, a noncompetition covenant against an independent contractor of a franchisee 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 protection is codified under RCW 49.62.030.
This provision is particularly important for Carls Jr. franchisees in Washington who may hire independent contractors. It clarifies the conditions under which a noncompetition agreement can be legally enforced. If an independent contractor's annualized earnings do not exceed the specified threshold, any noncompetition covenant they've signed is not enforceable.
Carls Jr. franchisees should be aware of this Washington state law to ensure compliance and avoid potential legal issues related to noncompetition agreements with their independent contractors. This addendum serves to modify any conflicting terms within the standard franchise agreement to align with Washington state law, providing clarity and protection for both the franchisee and the independent contractor.