What happens to provisions in the Crown Gold Exchange franchise agreement that conflict with limitations on noncompetition covenants in Washington?
Crown_Gold_Exchange Franchise · 2024 FDDAnswer from 2024 FDD Document
o 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.
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
Source: Item 23 — RECEIPTS (FDD pages 39–114)
What This Means (2024 FDD)
According to Crown Gold Exchange's 2024 Franchise Disclosure Document, any provisions within the franchise agreement that conflict with Washington state law regarding noncompetition covenants are considered void and unenforceable in Washington. This specifically refers to limitations set forth in RCW 49.62.020 and RCW 49.62.030. These statutes address the enforceability of noncompetition covenants against employees and independent contractors.
Under Washington law, a noncompetition covenant is void and unenforceable against an employee if their annualized earnings from the party seeking enforcement do not exceed $100,000 per year, a figure that is adjusted annually for inflation. Similarly, a noncompetition covenant is unenforceable against an independent contractor if their annualized earnings from the enforcing party are below $250,000 per year, also subject to annual inflation adjustments.
For a prospective Crown Gold Exchange franchisee in Washington, this means that any clause in the franchise agreement attempting to restrict competition from employees or independent contractors earning below these thresholds will not be legally binding. Franchisees should be aware of these limitations and ensure their agreements with employees and independent contractors comply with Washington law to avoid potential legal issues.