Does the Healthsource Chiropractic amendment address any violations in connection with the sale of franchises in Washington?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
eable in Washington.
Item 17(d) of the Franchise Disclosure Document, regarding termination by a franchisee of a franchise agreement – is revised to state that such provision is subject to Washington law.
Items 17(q) and (r) of the Franchise Disclosure Document, regarding non-competition covenants during and after the term of the franchise, is revised to state that such provisions are subject to Washington law.
The franchisor may use the services of franchise brokers to assist it in selling franchises. A franchise broker represents the franchisor and is paid a fee for referring prospects to the franchisor and/or selling the franchise. Do not rely only on the information provided by a franchise broker about a franchise. Do your own investigation by contacting the franchisor's current and former franchisees to ask them about their experience with the franchisor.
In In re: Franchise No Poaching Provisions, HealthSource Chiropractic, Inc., State of Washington, King County Superior Court No. 19-2-27562-6 SEA, on October 18, 2019, the Attorney General of the State of Washington alleged certain provisions contained in
HealthSource's prior versions of the franchise agreement contained "no-poach" provisions, and also alleged these provisions could constitute a violation of the State of Washington's Consumer Protection Act, RCW 19.86.030. Specifically, HealthSource's franchise agreement previously contained language that prohibited a franchisee from soliciting or hiring employees who worked for HealthSource during the term of the franchise agreement, or who worked for that particular franchise location if the current franchise owner sold the clinic and left the HealthSource system.
HealthSource and the State of Washington entered into an Assurance of Discontinuance whereby HealthSource agreed to not enforce any "no-poach" provisions contained in any existing franchise agreements, to amend franchise agreements with entities within the State of Washington to remove any "no-poach" provisions, and to not include any "no-poach" provisions in franchise agreements in the future. The Assurance of Discontinuance resolved all issues raised by the State of Washington against HealthSource, and HealthSource has fully performed its duties under the Assurance of Discontinuance.
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic FDD, an amendment addresses violations related to franchise agreements in Washington. In 2019, the Attorney General of the State of Washington raised concerns about "no-poach" provisions in HealthSource's franchise agreements, alleging they could violate the state's Consumer Protection Act. These provisions restricted franchisees from hiring employees who worked for HealthSource or a specific franchise location.
To resolve these issues, HealthSource Chiropractic entered into an Assurance of Discontinuance with the State of Washington. As part of this agreement, HealthSource committed to not enforcing any existing "no-poach" clauses, to amend franchise agreements in Washington to remove these provisions, and to refrain from including such clauses in future agreements. The Assurance of Discontinuance effectively resolved all concerns raised by the State of Washington, and HealthSource has fulfilled all its obligations under the agreement.
Furthermore, the FDD states that any conflicting provisions in the franchise agreement that would restrict a franchisee from soliciting or hiring any employee of a franchisee of the same franchisor or any employee of the franchisor are void and unenforceable in Washington. Additionally, franchisees in Washington cannot waive claims under state franchise law or disclaim reliance on statements made by Healthsource Chiropractic.