How does the Dryject franchisor's definition of the business relationship (Item 8) affect the franchisee's ability to negotiate fees (Item 6)?
Dryject Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 8: BUSINESS RELATIONSHIP]
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- Transfer Fees. Transfer fees are collectable only to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
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- Termination by Franchisee. The franchisee may terminate the franchise agreement under any grounds permitted under state law.
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- Certain Buy-Back Provisions. Provisions in franchise agreements or related agreements that permit the franchisor to repurchase the franchisee's business for any reason during the term of the franchise agreement without the franchisee's consent are unlawful pursuant to RCW 19.100.180(2)(j), unless the franchise is terminated for good cause.
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- Fair and Reasonable Pricing. Any provision in the franchise agreement or related agreements that requires the franchisee to purchase or rent any product or service for more than a fair and reasonable price is unlawful under RCW 19.100.180(2)(d).
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- Waiver of Exemplary & Punitive Damages. RCW 19.100.190 permits franchisees to seek treble damages under certain circumstances.
Accordingly, provisions contained in the franchise agreement or elsewhere requiring franchisees to waive exemplary, punitive, or similar damages are void, except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel, in accordance with RCW 19.100.220(2).
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- Franchisor's Business Judgement. Provisions in the franchise agreement or related agreements stating that the franchisor may exercise its discretion on the basis of its reasonable business judgment may be limited or superseded by RCW 19.100.180(1), which requires the parties to deal with each other in good faith.
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- Indemnification. Any provision in the franchise agreement or related agreements requiring the franchisee to indemnify, reimburse, defend, or hold harmless the franchisor or other parties is hereby modified such that the franchisee has no obligation to indemnify, reimburse, defend, or hold harmless the franchisor or any other indemnified party for losses or liabilities to the extent that they are caused by the indemnified party's negligence, willful misconduct, strict liability, or fraud.
What This Means (2025 FDD)
According to Dryject's 2025 Franchise Disclosure Document, Item 8 outlines several aspects of the business relationship between the franchisor and franchisee, but it does not explicitly address the franchisee's ability to negotiate the fees outlined in Item 6. However, it does state that transfer fees are only collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer. This implies some level of scrutiny regarding the justification of these fees.
Item 8 includes provisions that may indirectly affect a franchisee's financial obligations. For example, it states that provisions requiring franchisees to waive exemplary, punitive, or similar damages are void, except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. This could impact the financial consequences of disputes. Additionally, any provision requiring the franchisee to purchase or rent any product or service for more than a fair and reasonable price is unlawful under RCW 19.100.180(2)(d). This clause could be relevant if the franchisee is obligated to purchase certain products or services from the franchisor or approved suppliers.
Item 8 also addresses the franchisor's business judgment, stating that provisions allowing the franchisor to exercise discretion based on reasonable business judgment may be limited or superseded by RCW 19.100.180(1), which requires the parties to deal with each other in good faith. This could potentially influence how fees are determined and applied. Furthermore, the franchisee's obligation to indemnify the franchisor is modified such that the franchisee is not obligated to indemnify the franchisor for losses or liabilities caused by the franchisor's negligence, willful misconduct, strict liability, or fraud.
While Item 8 does not directly grant franchisees the ability to negotiate initial or ongoing fees, the stipulations regarding fair pricing, transfer fees, and the franchisor's business judgment could provide some leverage or protection against unreasonable financial demands. A prospective franchisee should seek clarification from Dryject regarding the extent to which fees are negotiable and the specific criteria used to determine those fees.