For a Healthsource Chiropractic franchise in Washington, what is the impact of the Washington Franchise Investment Protection Act on the franchise agreement?
Healthsource_Chiropractic Franchise · 2025 FDDAnswer from 2025 FDD Document
y law.
- c. Liquidated damage provisions may be unenforceable under South Dakota law. Liquidated damage provisions are void.
- d. Pursuant to SDCL 37-5B-21, any condition, stipulation or provision purporting to waive compliance with, or relieving a person of a duty or liability under, any provision of Chapter 37-5B of South Dakota Codified Law or any rule or order thereunder is void.
WASHINGTON
ADDENDUM TO FRANCHISE DISCLOSURE DOCUMENT FOR THE STATE OF WASHINGTON
Washington requires that the following risks be highlighted concerning this Franchise:
- During the last 3 years, a large number of franchised outlets (138) were terminated, not renewed, re-acquired, or ceased operations for other reasons. This franchise could be a higher risk investment than a franchise in a system with a lower turnover rate.
Additional Disclosures Required in Washington
In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW will prevail.
RCW 19.100.180 may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise. There may also
be court decisions which may supersede the franchise agreement in your relationship with the franchisor including the areas of termination and renewal of your franchise.
In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.
A release or waiver of rights executed by a franchisee may not include rights under the Washington Franchise Investment Protection Act or any rule or order thereunder except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act, or rights or remedies under the Act such as a right to a jury trial, may not be enforceable.
Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
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
Source: Item 23 — Receipts (FDD pages 77–282)
What This Means (2025 FDD)
According to the 2025 Healthsource Chiropractic Franchise Disclosure Document, the Washington Franchise Investment Protection Act (WFIPA) has several significant impacts on franchise agreements within the state. In the event of any conflict of laws, the WFIPA, Chapter 19.100 RCW, will take precedence over the franchise agreement. Specifically, RCW 19.100.180 may supersede the franchise agreement, particularly in matters concerning the termination and renewal of the franchise. Additionally, court decisions may also override the franchise agreement in these areas. This ensures that franchisees in Washington are protected by state law, even if the franchise agreement contains conflicting terms.
For Healthsource Chiropractic franchises in Washington, the WFIPA also affects dispute resolution and franchisee rights. Any arbitration or mediation involving a franchise purchased in Washington must occur within the state, unless both parties agree to an alternative location or the arbitrator/mediator determines otherwise. Franchisees have the right to bring legal action in Washington for issues arising from the sale of the franchise or violations of the WFIPA, provided litigation isn't precluded by the franchise agreement. Furthermore, any release or waiver of rights by a franchisee cannot include rights under the WFIPA, unless it is part of a negotiated settlement with independent legal representation after the agreement is already in effect. Provisions that unreasonably limit the statute of limitations or rights, such as the right to a jury trial, may not be enforceable.
The WFIPA also addresses non-competition covenants and restrictions on hiring employees. Under RCW 49.62.020, a noncompetition covenant is unenforceable against an employee of a Healthsource Chiropractic franchisee if the employee's annualized earnings are below $100,000 (this amount is subject to annual inflation adjustments). Similarly, non-competition covenants are unenforceable against independent contractors of a franchisee under RCW 49.62.030, unless their annualized earnings exceed $250,000 (also adjusted for inflation annually). Additionally, RCW 49.62.060 prohibits Healthsource Chiropractic from restricting a franchisee from soliciting or hiring employees of other Healthsource Chiropractic franchisees or employees of the franchisor itself. Any conflicting provisions in the franchise agreement are considered void and unenforceable in Washington. Transfer fees are only collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.