In Washington, what happens to any provision in the Chesters franchise agreement that conflicts with the limitations on noncompetition covenants?
Chesters Franchise · 2025 FDDAnswer from 2025 FDD Document
agreements require a franchisee to reimburse the franchisor for court costs or expenses, including attorneys' fees, such provision applies only if the franchisor is the prevailing party in any judicial or arbitration proceeding.
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- Noncompetition Covenants. 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 enforc
Source: Item 23 — **RECEIPTS (FDD pages 48–197)
What This Means (2025 FDD)
According to Chesters's 2025 Franchise Disclosure Document, any part of the franchise agreement that clashes with the limitations on noncompetition covenants is considered void and unenforceable in Washington state. These limitations are set by Washington statutes RCW 49.62.020 and RCW 49.62.030.
Specifically, under RCW 49.62.020, a noncompetition covenant cannot be enforced against an employee of a Chesters franchisee if the employee's annualized earnings from the franchisee are $100,000 or less. This earnings threshold will be adjusted annually for inflation. Similarly, RCW 49.62.030 states that a noncompetition covenant is unenforceable against an independent contractor of a Chesters franchisee if their annualized earnings from the franchisee are $250,000 or less, also adjusted annually for inflation.
This means that Chesters franchisees in Washington need to be aware that any non-compete agreements they have with employees or independent contractors earning below these thresholds are not legally enforceable. Chesters cannot enforce any conflicting terms in its franchise agreement within Washington, ensuring that the state's laws protecting workers take precedence.