For a Healthsource Chiropractic franchise in Washington, what is the potential impact of court decisions on 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, a previous legal action in Washington State influenced the franchise agreement. In 2019, the Attorney General of Washington alleged that HealthSource's prior franchise agreements contained "no-poach" provisions that violated the state's Consumer Protection Act. These provisions restricted franchisees from hiring employees who worked for HealthSource or for a specific franchise location if the owner sold the clinic and left the HealthSource system.
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 enforce any existing "no-poach" provisions, to amend franchise agreements in Washington to remove these provisions, and to refrain from including such provisions in future agreements within the state. This Assurance of Discontinuance effectively resolved the issues raised by the Attorney General, and HealthSource has fulfilled its obligations under the agreement.
Furthermore, Washington state law (RCW 49.62.060) now prohibits HealthSource Chiropractic from restricting a franchisee from soliciting or hiring any employee of another HealthSource franchisee or any employee of HealthSource itself. Consequently, any conflicting provisions in the franchise agreement are considered void and unenforceable in Washington. Additionally, franchisees cannot waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on statements made by HealthSource or its representatives. This provision takes precedence over any other conflicting terms in the franchise agreement.
For a prospective Healthsource Chiropractic franchisee in Washington, this means that the franchise agreement has been modified to comply with state law regarding employee solicitation and hiring. The franchisee has the right to hire employees from other Healthsource Chiropractic locations or from Healthsource Chiropractic itself. The franchisee also retains their rights under Washington franchise law and cannot be forced to waive those rights through any agreement signed with Healthsource Chiropractic.