What is the annualized earnings threshold for an independent contractor of a Cool Binz franchisee in Washington, above which a noncompetition covenant may be enforceable?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
ompensate the franchisor for expenses directly incurred as a result of 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 ind
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, in the state of Washington, a noncompetition covenant is unenforceable against an independent contractor working for a Cool Binz franchisee if the contractor's annualized earnings from the franchisee are $250,000 or less. This threshold is subject to annual adjustments for inflation. This is based on the Revised Code of Washington (RCW) 49.62.030. Therefore, if an independent contractor's earnings exceed $250,000 (adjusted for inflation), a noncompetition covenant may be enforceable.
This provision is important for prospective Cool Binz franchisees in Washington because it sets clear limitations on the enforceability of non-compete agreements with independent contractors. Franchisees need to be aware of this earnings threshold when drafting or enforcing such agreements. Failing to comply with these regulations could render the non-compete agreement void.
It is important to note that the $250,000 threshold is subject to annual adjustments for inflation, so franchisees should stay informed about the current applicable threshold. Additionally, this specific provision applies only to independent contractors in Washington, and non-compete agreements in other states may be subject to different regulations.