Will the earnings threshold for noncompetition covenants related to Chocolate Fish Coffee franchisees in Washington be adjusted annually?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
sfer 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 result, any pr
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to Chocolate Fish Coffee's 2024 Franchise Disclosure Document, the earnings threshold for noncompetition covenants in Washington State will be adjusted annually for inflation. Specifically, for an employee of a Chocolate Fish Coffee franchisee, a noncompetition covenant is unenforceable if their annualized earnings are $100,000 or less. For an independent contractor of a franchisee, the threshold is $250,000 in annualized earnings.
This adjustment is mandated by Washington State law (RCW 49.62.020 and RCW 49.62.030), and any conflicting provisions in the franchise agreement are void and unenforceable in Washington. This means that Chocolate Fish Coffee franchisees in Washington must be aware of these annually adjusted income thresholds when implementing non-compete agreements with their employees or independent contractors.
For a prospective Chocolate Fish Coffee franchisee in Washington, this information is crucial for understanding the limitations on non-competition agreements. They need to stay informed about the annually adjusted earnings thresholds to ensure compliance with state law. It also affects their ability to protect their business interests through non-compete agreements, as these agreements are only enforceable if the employee's or contractor's earnings exceed the specified thresholds.