How does the annual adjustment for inflation affect the earnings thresholds related to noncompetition covenants for Cool Binz employees and independent contractors in Washington?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
ired by Sections 10.B.8 and 11.C of the Franchise Agreement, does not apply to claims arising under the Franchise Investment Protection Act, chapter 19.100 RCW, or any rules or order adopted thereunder, in accordance with RCW 19.100.220(2).
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- Transfer fees are collectable only to the extent that they compensate the franchisor for expenses directly incurred as a result of transfer .
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- 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 ind
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, Washington state law impacts the enforceability of noncompetition covenants for employees and independent contractors working for a Cool Binz franchisee. Specifically, these covenants are void and unenforceable if the employee's annualized earnings from the party seeking enforcement do not exceed $100,000 per year. For independent contractors, the threshold is higher, at $250,000 per year. These earnings thresholds are subject to annual adjustments for inflation.
The annual inflation adjustment means that the specific dollar amounts ($100,000 for employees and $250,000 for independent contractors) will likely increase each year to account for changes in the cost of living. This adjustment ensures that the earnings thresholds remain relevant over time. As inflation rises, the thresholds will increase, meaning more employees and independent contractors could potentially fall outside the scope of enforceable noncompetition agreements.
For a prospective Cool Binz franchisee in Washington, this has important implications. The franchisee needs to be aware of the current earnings thresholds and how they are adjusted annually. When drafting employment or contractor agreements that include noncompetition clauses, the franchisee must ensure that the employee's or contractor's potential earnings meet the adjusted threshold at the time of enforcement. Failure to do so could render the noncompetition covenant unenforceable, potentially allowing former employees or contractors to compete with the Cool Binz business.
Cool Binz franchisees should consult with legal counsel to stay informed about the updated earnings thresholds each year and to ensure their agreements comply with Washington state law. This proactive approach will help protect the franchisee's business interests while remaining compliant with applicable regulations. The FDD also states that any provisions in the franchise agreement that conflict with these limitations are void and unenforceable in Washington.