In Washington state, is Fat Shack permitted to include provisions in the franchise agreement that conflict with the earnings thresholds for noncompetition covenants?
Fat_Shack Franchise · 2025 FDDAnswer from 2025 FDD Document
- Noncompetition Covenants. 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 provision contained in the franchise agreement or elsewhere that conflicts with these limitations is v
Source: Item 23 — Receipts (FDD pages 53–223)
What This Means (2025 FDD)
According to Fat Shack's 2025 Franchise Disclosure Document, any provisions within the franchise agreement that conflict with Washington state's limitations on noncompetition covenants are void and unenforceable.
Specifically, in Washington, a noncompetition covenant is unenforceable against an employee of a Fat Shack franchisee if the employee's annualized earnings are $100,000 or less. This amount is subject to annual inflation adjustments. Similarly, a noncompetition covenant is unenforceable against an independent contractor of a Fat Shack franchisee if their annualized earnings are $250,000 or less, also adjusted for inflation annually.
This means that Fat Shack cannot enforce non-compete agreements against franchisee employees or contractors who earn below these thresholds. Any clause in the franchise agreement suggesting otherwise would not be valid in Washington state. This protects lower-earning workers and contractors from being unduly restricted by non-compete clauses, ensuring they can seek other employment opportunities without legal repercussions if their income does not exceed the specified limits.