Are there any provisions in the Engel & Volkers Franchise Agreement that conflict with the limitations on non-competition covenants in Washington state?
Engel_Volkers Franchise · 2025 FDDAnswer from 2025 FDD Document
e following:
"Only the terms of the Franchise Agreement and other related written agreements are binding (subject to applicable state law). Any representations or promises outside of the disclosure document and Franchise Agreement may not be enforceable."
ADDENDUM TO THE FRANCHISE DISCLOSURE DOCUMENT PURSUANT TO THE WASHINGTON FRANCHISE INVESTMENT LAW
Notwithstanding anything to the contrary in the Franchise Disclosure Document, the following provisions shall supersede and apply to all franchises offered and sold in the State of Washington.
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- If any of the provisions in the Franchise Disclosure Document or Franchise Agreement are inconsistent with the relationship provisions of RCW 19.100.180 or other requirements of the Washington Franchise Investment Protection Act (the "Act"), the provisions of the Act will prevail over the inconsistent provisions of the Franchise Disclosure Document and Franchise Agreement with regard to any franchises sold in Washington. There may also be court decisions which may supersede the Franchise Agreement, including in the areas of termination and renewal of the franchise.
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- 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.
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Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 63–71)
What This Means (2025 FDD)
According to Engel & Volkers' 2025 Franchise Disclosure Document, the addendum to the Franchise Disclosure Document pursuant to the Washington Franchise Investment Law states that any provisions inconsistent with the relationship provisions of RCW 19.100.180 or other requirements of the Washington Franchise Investment Protection Act will be superseded by the Act's provisions for franchises sold in Washington. This means that if any part of the Engel & Volkers Franchise Agreement conflicts with Washington state law regarding franchise relationships or investment protection, the state law will take precedence.
Specifically, the FDD notes that 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, with adjustments for inflation. Furthermore, 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, also adjusted annually for inflation.
Engel & Volkers acknowledges that any provisions in the Franchise Agreement conflicting with these limitations on non-competition covenants are void and unenforceable in Washington. This ensures that franchisees and their employees or independent contractors are not unduly restricted by non-compete agreements that do not meet the state's earnings thresholds. This protection is crucial for franchisees in Washington, as it prevents Engel & Volkers from enforcing overly restrictive non-compete clauses that could hinder their ability to operate their business effectively or limit the employment opportunities of their staff.