What is the effect of RCW 49.62.020 on noncompetition covenants for Cool Binz franchisees in Washington?
Cool_Binz Franchise · 2025 FDDAnswer from 2025 FDD Document
he Washington Franchise Investment Protection Act or any rule or order thereunder 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 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.
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- Transfer fees are collectable to the extent that they reflect the Franchisor's reasonable estimated or actual costs in effecting a 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 independent contractor of a franchisee under RCW 49.62.030 unless the independent contractor's earnings from the party seeking enforcement, when annualized, exc
Source: Item 23 — RECEIPTS (FDD pages 63–238)
What This Means (2025 FDD)
According to Cool Binz's 2025 Franchise Disclosure Document, RCW 49.62.020 directly impacts the enforceability of noncompetition covenants for Cool Binz franchisees in Washington. Specifically, this statute renders any noncompetition covenant void and unenforceable against an employee of a Cool Binz franchisee if the employee's annualized earnings from the franchisee do not exceed $100,000 per year. This threshold is subject to annual adjustments for inflation.
Furthermore, RCW 49.62.030 extends similar protections to independent contractors working for Cool Binz franchisees. A noncompetition covenant is unenforceable against an independent contractor unless their annualized earnings from the franchisee exceed $250,000 per year, also adjusted annually for inflation. These regulations mean that Cool Binz cannot enforce non-compete agreements against lower-earning employees or independent contractors of its franchisees in Washington State.
Moreover, RCW 49.62.060 explicitly prohibits Cool Binz from restricting or preventing a franchisee from soliciting or hiring employees of either another Cool Binz franchisee or Cool Binz itself. Any provisions within the franchise agreement that contradict these limitations set by Washington law are deemed void and unenforceable within the state. This ensures that Cool Binz franchisees have the freedom to hire and solicit employees without undue restrictions, promoting a competitive labor environment within the Cool Binz franchise system in Washington.