For a Ledgers franchise in Washington, what is the effect of the Washington Franchise Investment Protection Act on the franchisor's ability to compete with the franchisee?
Ledgers Franchise · 2025 FDDAnswer from 2025 FDD Document
). In addition, a noncompetition covenant is void and unenforceable against an independent contractor of a franchisee under RCW 49.62.030 unless the independent contractor's earnings from the party seeking enforcement, when annualized, exceed $250,000 per year (an amount that will be adjusted annually for inflation). As a result, any provision contained in the franchise agreement or elsewhere that conflicts with these limitations is void and unenforceable in Washington.
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- Nonsolicitation Agreements. RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor. As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.
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- Questionnaires and Acknowledgments. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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Source: Item 22 — CONTRACTS (FDD page 46)
What This Means (2025 FDD)
According to the 2025 Ledgers Franchise Disclosure Document, the Washington Franchise Investment Protection Act impacts the franchisor's ability to enforce certain restrictive covenants. Specifically, RCW 49.62.060 prevents Ledgers from restricting, restraining, or prohibiting a franchisee from soliciting or hiring any employee of another Ledgers franchisee or any employee of Ledgers itself. Any provision in the franchise agreement that attempts to impose such restrictions is void and unenforceable in Washington. This means a Ledgers franchisee in Washington has the freedom to recruit and hire employees from other Ledgers locations or from Ledgers corporate operations without contractual limitations.
This protection extends to the franchisee's ability to communicate with regulators. Any clause in the franchise agreement that prevents a franchisee from communicating with or complaining to regulators is inconsistent with the Franchise Disclosure Document and unlawful under RCW 19.100.180(2)(h). This ensures that franchisees can freely report concerns or violations without fear of reprisal from Ledgers.
Furthermore, the Act addresses the enforceability of releases and waivers. A release or waiver of rights that requires a franchisee to waive compliance with any provision under the Washington Franchise Investment Protection Act is void unless it meets specific conditions: it must be executed pursuant to a negotiated settlement after the agreement is in effect, and both parties must be represented by independent counsel, as per RCW 19.100.220(2). This provision aims to protect franchisees from unknowingly or unfairly relinquishing their rights under the Act, ensuring a level playing field in any dispute resolution with Ledgers.