What happens to provisions in the Extreme Art Studio franchise agreement that conflict with limitations on non-competition covenants in Washington?
Extreme_Art_Studio Franchise · 2024 FDDAnswer from 2024 FDD Document
tion Act, in Washington.
A release or waiver of rights executed by a franchisee may not include rights under the Washington Franchise Investment Protection Act or any rule or order thereunder except when executed pursuant to 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 non-competition 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 non-competition covenant is void and unenforceable against an independent contractor of a franchisee under RCW 49.62.030 u
Source: Item 23 — RECEIPTS (FDD pages 49–214)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, any provisions within the franchise agreement that conflict with Washington state's limitations on non-competition covenants are considered void and unenforceable in Washington. This protection extends to both employees and independent contractors of an Extreme Art Studio franchisee.
Specifically, in Washington, a non-competition covenant is unenforceable against an employee if their annualized earnings from the party seeking enforcement do not exceed $100,000 per year, with this amount subject to annual inflation adjustments. Similarly, a non-competition covenant is unenforceable against an independent contractor if their annualized earnings from the enforcing party do not exceed $250,000 per year, also adjusted annually for inflation.
Furthermore, Extreme Art Studio is prohibited from restricting a franchisee from soliciting or hiring employees of either another franchisee within the Extreme Art Studio system or employees of the franchisor itself. Any clauses in the franchise agreement that attempt to impose such restrictions are void and unenforceable in Washington. This ensures that franchisees in Washington have the freedom to hire and solicit employees without undue constraints from the franchise agreement.