For a Healthsource Chiropractic franchise, what is the purpose of the Washington Amendment to the Development Agreement?
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 Franchise Disclosure Document, the Washington Amendment to the Development Agreement addresses concerns raised by the Attorney General of the State of Washington regarding "no-poach" provisions in HealthSource's prior franchise agreements. These provisions previously restricted franchisees from soliciting or hiring employees who worked for HealthSource or a specific franchise location. The Attorney General alleged that these provisions could violate the State of Washington's Consumer Protection Act.
To resolve these concerns, 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" provisions, amending franchise agreements within Washington to remove such provisions, and refraining from including them in future agreements. The amendment ensures that franchisees in Washington are not restricted from hiring or soliciting employees of HealthSource or its other franchisees, as prohibited by RCW 49.62.060.
Furthermore, the Washington Amendment includes a provision that protects franchisees by ensuring that no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by HealthSource Chiropractic or its representatives. This provision supersedes any conflicting terms in other documents related to the franchise agreement, providing additional protection to franchisees in Washington. In practical terms, this means that Healthsource Chiropractic franchisees in Washington have greater freedom in hiring and are better protected from potentially misleading information during the franchise sales process.