Can the franchisor's business judgment be limited by Washington law in the Chesters franchise agreement?

According to Chesters's 2025 Franchise Disclosure Document, provisions in the franchise agreement that allow Chesters to use its reasonable business judgment may be limited by Washington state law. Specifically, RCW 19.100.180(1) requires that all parties deal with each other in good faith. This means that even if the franchise agreement gives Chesters discretion in certain decisions, this discretion must be exercised in good faith, and cannot be used to unfairly disadvantage the franchisee.

This limitation is significant for prospective Chesters franchisees in Washington because it provides a legal basis to challenge decisions made by Chesters that, while seemingly within the bounds of the franchise agreement, are not made in good faith. For example, if Chesters makes a decision that benefits the company but severely harms a franchisee's business, the franchisee may have grounds to argue that Chesters did not act in good faith, thus violating Washington law.

It is important for potential Chesters franchisees to understand that Washington's Franchise Investment Protection Act can override certain provisions in the franchise agreement. This ensures a baseline level of fairness and protects franchisees from potentially overreaching actions by the franchisor. Franchisees should consult with an attorney to fully understand their rights and protections under Washington law.