Under what condition is a buy-back provision in a Carls Jr. franchise agreement lawful in Washington?

According to the 2025 Carls Jr. Franchise Disclosure Document, in Washington, a buy-back provision in a franchise agreement that allows Carls Jr. to repurchase a franchisee's business during the term of the agreement is generally unlawful. However, there is an exception: such a provision is lawful if the franchise is terminated for good cause. This is in accordance with RCW 19.100.180(2)(j).

This means that Carls Jr. cannot simply decide to buy back a franchise at will during its term unless there is a legitimate reason for terminating the agreement, such as the franchisee's failure to comply with the terms of the franchise agreement. The "good cause" standard provides some protection to franchisees against arbitrary or opportunistic buy-backs by the franchisor.

Prospective Carls Jr. franchisees in Washington should carefully review the franchise agreement to understand what constitutes "good cause" for termination. They should also be aware of their rights under the Washington Franchise Investment Protection Act, which aims to protect franchisees from unfair practices. Understanding these provisions can help a franchisee make informed decisions and protect their investment.