What is the effect of the Washington Franchise Investment Protection Act on the termination and renewal of a Craters & Freighters franchise?
Craters_Freighters Franchise · 2025 FDDAnswer from 2025 FDD Document
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CRATERS & FREIGHTERS FRANCHISE COMPANY
WASHINGTON ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT, FRANCHISE AGREEMENT, AND RELATED AGREEMENTS
In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW will prevail.
RCW 19.100.180 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 or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.
A release or waiver of rights executed by a franchisee may not include rights under the 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 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 pages 49–50)
What This Means (2025 FDD)
According to the 2025 Craters & Freighters Franchise Disclosure Document, the Washington Franchise Investment Protection Act (Chapter 19.100 RCW) has several important effects on franchise agreements within the state, particularly concerning termination and renewal. The FDD includes a Washington addendum that explicitly states the provisions of the Washington Franchise Investment Protection Act will take precedence in case of any conflict of laws. This means that the standard terms of the Craters & Freighters franchise agreement may be superseded by Washington state law, offering additional protections to franchisees in Washington. Court decisions may also supersede the franchise agreement in the areas of termination and renewal.
Specifically, Item 17(d) of the Franchise Agreement table and Item 17(d) of the Area Development Agreement are amended to allow the franchisee to terminate the agreement under any grounds permitted by law. Item 17(v) of the Area Development Agreement table is also amended to clarify that the franchise agreement's provisions regarding termination by the franchisee are subject to state law. Furthermore, certain sections of the standard franchise agreement, such as Sections 25.5(d)(i) through 25.5(d)(v), will not apply in Washington. This indicates that certain termination clauses that might be present in the standard agreement are invalid in Washington, providing more security for the franchisee.
Additionally, any general release that a Craters & Freighters franchisee in Washington is required to sign will not apply to claims arising under the Washington Franchise Investment Protection Act (RCW 19.100). This ensures that franchisees do not inadvertently waive their rights under state law. The franchisor is also restricted from enforcing non-competition covenants against employees or independent contractors of a franchisee if their earnings do not exceed certain thresholds ($100,000 per year for employees and $250,000 per year for independent contractors, adjusted annually for inflation). These stipulations collectively strengthen the franchisee's position and protect their rights under Washington law.