For a Ledgers franchise in Washington, what is the effect of the Washington Franchise Investment Protection Act on the franchisor's ability to enforce provisions in related agreements?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
[Item 22: CONTRACTS]
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.
-
- General Release.
A release or waiver of rights in the franchise agreement or related agreements purporting to bind the franchisee to waive compliance with any provision under the Washington Franchise Investment Protection Act or any rules or orders thereunder is void except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel, in accordance with RCW 19.100.220(2).
In addition, any such release or waiver executed in connection with a renewal or transfer of a franchise is likewise void except as provided for in RCW 19.100.220(2).
-
- Statute of Limitations and Waiver of Jury Trial.
Provisions contained in the franchise agreement or related agreements that unreasonably restrict or limit the statute of limitations period for claims under the Washington Franchise Investment Protection Act, or rights or remedies under the Act such as a right to a jury trial, may not be enforceable.
-
- Transfer Fees.
Transfer fees are collectable only to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
-
- Termination by Franchisee.
The franchisee may terminate the franchise agreement under any grounds permitted under state law.
-
- Certain Buy-Back Provisions.
Provisions in franchise agreements or related agreements that permit the franchisor to repurchase the franchisee's business for any reason during the term of the franchise agreement without the franchisee's consent are unlawful pursuant to RCW 19.100.180(2)(j), unless the franchise is terminated for good cause.
-
- Fair and Reasonable Pricing.
Any provision in the franchise agreement or related agreements that requires the franchisee to purchase or rent any product or service for more than a fair and reasonable price is unlawful under RCW 19.100.180(2)(d).
-
- Waiver of Exemplary & Punitive Damages. [Item 22: CONTRACTS]
As a result, any provision contained in the franchise agreement or elsewhere that conflicts with these limitations is void and unenforceable in Washington.
-
- Prohibitions on Communicating with Regulators. Any provision in the franchise agreement or related agreements that prohibits the franchisee from communicating with or complaining to regulators is inconsistent with the express instructions in the Franchise Disclosure Document and is unlawful under RCW 19.100.180(2)(h).
Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers FDD, the Washington Franchise Investment Protection Act (WFIPA) significantly impacts the enforceability of certain provisions within the franchise agreement and related documents for franchises operating in Washington. Several clauses that might typically be included in franchise agreements are rendered void or unenforceable under Washington law to protect franchisees.
Specifically, any release or waiver of rights that requires a franchisee to waive compliance with the WFIPA is void unless it's part of a negotiated settlement with independent legal counsel after the agreement is already in effect. Similarly, such waivers are void if executed during a renewal or transfer, except under the same conditions of a negotiated settlement with counsel. Provisions that unreasonably restrict the statute of limitations for claims under the WFIPA or limit rights and remedies, such as the right to a jury trial, may also be unenforceable.
Furthermore, the WFIPA addresses specific aspects of the franchisor-franchisee relationship. For example, transfer fees can only be collected to the extent they reflect the franchisor's actual or estimated costs. Franchisees have the right to terminate the agreement on grounds permitted by state law. Buy-back provisions allowing the franchisor to repurchase the business without the franchisee's consent are unlawful unless the termination is for good cause. Also, it is unlawful for Ledgers to require a franchisee to purchase or rent any product or service for more than a fair and reasonable price. Provisions that prohibit a franchisee from communicating with regulators are also unlawful. These stipulations ensure that the Ledgers franchise agreement adheres to Washington state law, providing franchisees with certain protections and rights that cannot be waived or undermined by the agreement's terms.