What is the annual earnings threshold for an independent contractor of a Circle K franchisee in Washington for a noncompetition covenant to be enforceable?
Circle_K Franchise · 2025 FDDAnswer from 2025 FDD Document
egotiated 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 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.
Transfer 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).
Source: Item 22 — CONTRACTS (FDD page 100)
What This Means (2025 FDD)
According to Circle K's 2025 Franchise Disclosure Document, Washington state law impacts the enforceability of noncompetition covenants. Specifically, for an independent contractor working for a Circle K franchisee, a noncompetition covenant is only enforceable if the independent contractor's annualized earnings from the franchisee exceed $250,000 per year. This threshold is subject to annual adjustments for inflation. This means that if an independent contractor earns less than this adjusted amount, any agreement preventing them from competing with the Circle K franchise after their engagement ends would be legally void in Washington.
This provision protects lower-earning independent contractors from being unduly restricted in their future employment or business opportunities. It ensures that non-compete agreements are only applied to those with a significant level of compensation, reflecting a balance between protecting the franchisee's business interests and the contractor's ability to earn a living. For a prospective Circle K franchisee in Washington, this means they need to be aware of this earnings threshold when drafting agreements with independent contractors, as any non-compete clause would be unenforceable if the contractor's earnings fall below the specified level.
It is important to note that the $250,000 threshold is subject to annual inflation adjustments, so franchisees need to stay informed about the current applicable amount. Furthermore, this rule applies specifically to independent contractors and differs from the rules applicable to employees of a franchisee, who have a lower earnings threshold of $100,000 per year for non-competition covenants to be enforceable. Franchisees should consult with legal counsel to ensure their agreements comply with Washington state law and to understand the implications for their specific circumstances.