Will the earnings thresholds for non-competition covenants related to Endless Summer Sweets franchises in Washington be adjusted annually?
Endless_Summer_Sweets Franchise · 2024 FDDAnswer from 2024 FDD Document
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 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, exceed $250,00
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets's 2024 Franchise Disclosure Document, the earnings thresholds for non-competition covenants in Washington State are subject to annual adjustments for inflation. Specifically, for an employee of a franchisee, the non-competition covenant is void and unenforceable if their annualized earnings from the party seeking enforcement do not exceed $100,000 per year. For an independent contractor of a franchisee, this threshold is $250,000 per year. These amounts will be adjusted annually for inflation.
This means that the actual income level at which a non-compete agreement becomes enforceable may change each year, depending on inflation rates. As a result, Endless Summer Sweets franchisees in Washington need to stay informed about the current earnings thresholds to ensure their non-competition agreements are enforceable.
This provision is important for both the franchisee and their employees or independent contractors. Franchisees need to be aware of these thresholds to ensure their non-compete agreements are valid, while employees and contractors need to know their rights regarding non-competition covenants. It is also important to note that any provisions in the franchise agreement that conflict with these limitations are void and unenforceable in Washington.