In Washington, what is the minimum annualized earnings threshold for an employee of an Extreme Art Studio franchisee for a non-competition covenant to be enforceable?
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
Source: Item 23 — RECEIPTS (FDD pages 49–214)
What This Means (2024 FDD)
According to the 2024 Extreme Art Studio Franchise Disclosure Document, in Washington, a non-competition covenant is void and unenforceable against an employee of an Extreme Art Studio franchisee unless the employee's earnings, when annualized, exceed $100,000 per year. This amount will be adjusted annually for inflation.
This means that Extreme Art Studio franchisees in Washington cannot enforce non-compete agreements against employees who earn less than the annually adjusted threshold of $100,000. This limitation is imposed by Washington state law (RCW 49.62.020), and any conflicting provisions in the franchise agreement are void and unenforceable in Washington.
Prospective Extreme Art Studio franchisees in Washington should be aware of this restriction when hiring employees and considering the use of non-competition agreements. They should consult with legal counsel to ensure compliance with Washington state law and to draft enforceable non-competition agreements that take into account the employee's potential earnings and the annual inflation adjustments to the minimum earnings threshold.