What is the minimum annualized earnings threshold for an independent contractor of a Chesters franchisee for a noncompetition covenant to be enforceable?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
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 enforc
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters' 2025 Franchise Disclosure Document, a noncompetition covenant is unenforceable against an independent contractor working for a Chesters franchisee if the contractor's annualized earnings from the franchisee are below $250,000. This threshold is subject to annual adjustments for inflation. This provision is specifically applicable under Washington state law (RCW 49.62.030).
This means that if a Chesters franchisee in Washington wants to enforce a non-compete agreement against an independent contractor, they can only do so if the contractor earns more than $250,000 per year, adjusted for inflation. If the contractor earns less than this amount, the non-compete agreement is considered void and unenforceable under Washington law. This protects lower-earning independent contractors from being unduly restricted in their ability to work for competitors.
This stipulation is important for prospective Chesters franchisees in Washington state to understand, as it directly impacts their ability to restrict independent contractors from working for competing businesses. Franchisees should consult with legal counsel to ensure their non-competition agreements comply with Washington law and to understand the implications of this earnings threshold. The FDD specifies that any conflicting provisions in the franchise agreement are void and unenforceable in Washington.