What happens to provisions in the Chocolate Fish Coffee franchise agreement that conflict with limitations on noncompetition covenants in Washington?
Chocolate_Fish_Coffee Franchise · 2024 FDDAnswer from 2024 FDD Document
WASHINGTON ADDENDUM TO DISCLOSURE DOCUMENT AND RIDER TO FRANCHISE AND MULTI-UNIT DEVELOPMENT AGREEMENT
The state of Washington has a statute, RCW 19.100.180 which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. There may also be court decisions which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.
In any arbitration involving a franchise purchased in Washington, the arbitration site shall be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration, or as determined by the arbitrator.
In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW shall prevail.
A release or waiver of rights executed by a franchisee shall not include rights under the Washington Franchise Investment Protection Act except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of limitation period for claims under the Act, rights or remedies under the Act such as a right to a jury trial may not be enforceable.
Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
Source: Item 23 — RECEIPTS (FDD pages 41–119)
What This Means (2024 FDD)
According to the 2024 Chocolate Fish Coffee Franchise Disclosure Document, the Washington Addendum addresses potential conflicts between the franchise agreement and Washington state law, specifically the Washington Franchise Investment Protection Act, Chapter 19.100 RCW. In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act will take precedence over the franchise agreement. This means that if any part of the franchise agreement, including non-competition covenants, is inconsistent with the state's franchise laws, the state law will govern the relationship between the franchisee and Chocolate Fish Coffee.
This addendum also clarifies that a release or waiver of rights executed by a franchisee cannot include rights under the Washington Franchise Investment Protection Act unless it is part of a negotiated settlement reached after the franchise agreement is already in effect and both parties are represented by independent legal counsel. This provision aims to protect franchisees from unknowingly waiving their rights under the Act. Additionally, the addendum states that provisions that unreasonably restrict or limit the statute of limitations period for claims under the Act, or rights or remedies under the Act such as a right to a jury trial, may not be enforceable.
For a prospective Chocolate Fish Coffee franchisee in Washington, this addendum provides important legal protections. It ensures that the franchisee's rights under Washington law are not undermined by the franchise agreement. It also highlights the importance of seeking independent legal counsel before signing any releases or waivers, to ensure that their rights are fully protected. The franchisee should carefully review the franchise agreement and the Washington Franchise Investment Protection Act with their attorney to understand their rights and obligations.