For a Healthsource Chiropractic franchise in Washington, what is the effect of court decisions on the termination of the franchise 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, court decisions and state laws in Washington can significantly impact the enforceability of certain provisions within the franchise agreement, particularly concerning termination and post-termination obligations. Specifically, a case in Washington, In re: Franchise No Poaching Provisions, HealthSource Chiropractic, Inc., led to an Assurance of Discontinuance where Healthsource Chiropractic agreed not to enforce "no-poach" provisions in existing franchise agreements within Washington, amend agreements to remove such provisions, and refrain from including them in future agreements. This demonstrates that legal challenges can force Healthsource Chiropractic to alter its franchise agreements to comply with state laws.
Furthermore, Washington state law RCW 49.62.060 prohibits Healthsource Chiropractic from restricting a franchisee's ability to solicit or hire employees of either another franchisee within the system or Healthsource Chiropractic itself. Consequently, any clauses in the franchise agreement that attempt to impose such restrictions are deemed 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 during the franchise commencement, ensuring franchisees retain their legal rights.
These legal considerations mean that a Healthsource Chiropractic franchisee in Washington operates under a franchise agreement that is shaped not only by the franchisor but also by state laws and court decisions. This could provide franchisees with more flexibility in hiring and managing employees, as well as stronger protections against potentially misleading information from the franchisor. Prospective franchisees should carefully review the franchise agreement, paying close attention to how it has been modified to comply with Washington law, and consult with legal counsel to fully understand their rights and obligations.