What happens if a provision in the Chesters franchise agreement permits the franchisor to repurchase the franchisee's business without the franchisee's consent in Washington?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
Certain Buy-Back Provisions.
Provisions in franchise agreements or related agreements that permit the franchisor to repurchase the franchisee's business for any reason during the term of the franchise agreement without the franchisee's consent are unlawful pursuant to RCW 19.100.180(2)(j), unless the franchise is terminated for good cause.
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- Fair and Reasonable Pricing.
Any provision in the franchise agreement or related agreements that requires the franchisee to purchase or rent any product or service for more than a fair and reasonable price is unlawful under RCW 19.100.180(2)(d).
Waiver of Exemplary & Punitive Damages.
RCW 19.100.190 permits franchisees to seek treble damages under certain circumstances.
Accordingly, provisions contained in the franchise agreement or elsewhere requiring franchisees to waive exemplary, punitive, or similar damages are void, except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel, in accordance with RCW 19.100.220(2).
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, a provision in the franchise agreement that allows Chesters to repurchase the franchisee's business without their consent during the franchise term is unlawful in Washington, unless the termination is for good cause. This is based on RCW 19.100.180(2)(j). As a result, such provisions are void and unenforceable in Washington. This protection is part of Washington's broader stance on franchisee rights, as outlined in the Washington Addendum to the Franchise Disclosure Document. This addendum modifies the franchise agreement and related documents for franchises offered or operated in Washington.
This means that Chesters franchisees in Washington have some protection against the franchisor taking back their business without a valid reason. The "good cause" standard provides a legal benchmark, ensuring that Chesters cannot arbitrarily or unfairly reclaim a franchise. This provision aims to balance the power dynamic between franchisor and franchisee, preventing potential abuse of repurchase rights. However, the definition of "good cause" can be subjective and may require legal interpretation in specific cases.
For a prospective Chesters franchisee in Washington, this information is crucial for understanding their rights and protections under state law. It's important to carefully review the franchise agreement and any related documents with legal counsel to fully understand the implications of this provision and what constitutes "good cause" for termination. Franchisees should also be aware of other protections afforded by Washington law, such as those related to non-solicitation agreements and communication with regulators, to ensure they are operating in compliance and safeguarding their interests.