In Washington, what happens to provisions in the Chem Dry franchise agreement that conflict with limitations on non-competition covenants?
Chem_Dry Franchise · 2024 FDDAnswer from 2024 FDD Document
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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 be adjusted annually for inflation). As a res
Source: Item 23 — Receipts (FDD pages 68–264)
What This Means (2024 FDD)
According to Chem Dry's 2024 Franchise Disclosure Document, Washington state law places limitations on non-competition covenants. Specifically, 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.
Furthermore, RCW 49.62.030 states that a noncompetition covenant is void and unenforceable against an independent contractor of a franchisee unless the independent contractor's earnings from the party seeking enforcement, when annualized, exceed $250,000 per year, also adjusted annually for inflation.
Therefore, any provisions within the Chem Dry franchise agreement or any other related documents that conflict with these limitations on non-competition covenants are considered void and unenforceable in the state of Washington. This means that Chem Dry franchisees in Washington must ensure their non-competition agreements with employees and independent contractors comply with these earnings thresholds to be enforceable.