How often is the earnings amount adjusted for inflation regarding the enforceability of a noncompetition covenant against a Fat Shack franchisee's employee?

According to Fat Shack's 2025 Franchise Disclosure Document, specifically the Washington Rider to the Nondisclosure and Noncompetition Agreement, the earnings threshold for noncompetition covenants is adjusted annually for inflation. This adjustment impacts the enforceability of these covenants against both employees and independent contractors of a Fat Shack franchisee in Washington state. For an employee, the noncompetition covenant is void and unenforceable if their annualized earnings from the party seeking enforcement do not exceed $100,000 per year, with this amount being adjusted annually for inflation.

Similarly, for an independent contractor of a Fat Shack franchisee, a noncompetition covenant is unenforceable if their annualized earnings from the enforcing party are below $250,000 per year, also subject to annual inflation adjustments. This means that these specific earnings thresholds are not fixed and will change each year to reflect inflation, potentially affecting whether a noncompetition agreement can be legally enforced against a franchisee's employee or independent contractor in Washington.

This annual adjustment is a crucial consideration for Fat Shack franchisees in Washington, as it directly influences their ability to enforce noncompetition agreements. Franchisees need to stay informed about the updated earnings thresholds each year to ensure their noncompetition agreements are enforceable. Any provisions in the franchise agreement that conflict with these limitations are void and unenforceable in Washington.