What is the minimum annualized earnings threshold for an employee of an Endless Summer Sweets franchisee in Washington for a noncompetition covenant to be enforceable?
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 $250,000 per year (an amount that will be adjusted annually for inflation). As a result, any provisions contained in the franchise agreement or elsewhere that conflict with these limitations are void and unenforceable in Washington.
RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee
Source: Item 23 — RECEIPTS (FDD pages 39–125)
What This Means (2024 FDD)
According to Endless Summer Sweets' 2024 Franchise Disclosure Document, in Washington state, a noncompetition covenant is void and unenforceable against an employee of a franchisee unless the employee's annualized earnings exceed $100,000 per year. This amount will be adjusted annually for inflation. This means that if an Endless Summer Sweets franchisee in Washington wants to enforce a non-compete agreement with an employee, that employee must earn at least $100,000 annually, or the agreement is not legally enforceable.
This provision also extends to independent contractors. A noncompetition covenant is void and unenforceable against an independent contractor of a franchisee unless the independent contractor's earnings from the party seeking enforcement, when annualized, exceed $250,000 per year, and this amount will be adjusted annually for inflation.
Endless Summer Sweets franchisees in Washington should be aware of these limitations on non-competition agreements. Any provisions in the franchise agreement or other documents that conflict with these limitations are void and unenforceable in Washington. Additionally, Endless Summer Sweets cannot restrict a franchisee from soliciting or hiring any employee of a franchisee of the same franchisor or any employee of the franchisor.