Under what circumstances are the covenants that survive termination or expiration of the Marble Slab Creamery franchise agreement enforceable?
Marble_Slab_Creamery Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchise Agreement contains a covenant not to compete which extends beyond the termination of the franchise. This provision may not be enforceable under California law.
- Item 17(r) in the table is modified by adding the following to the summary description opposite the subsection entitled "Non-competition covenants after the franchise is terminated or expires":
"Covenants not to compete such as those mentioned above are generally considered unenforceable in the State of North Dakota."
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 be adjusted annually for inflation). 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 provisions contained in the franchise agreement or elsewhere that conflict with these limitations are void and unenforceable in Washington.
Source: Item 23 — RECEIPT (FDD pages 101–346)
What This Means (2025 FDD)
According to the 2025 Marble Slab Creamery FDD, the enforceability of covenants that extend beyond the termination or expiration of the franchise agreement is subject to state-specific laws. In California, the FDD states that a covenant not to compete extending beyond the termination of the franchise agreement may not be enforceable under California law.
In North Dakota, covenants not to compete are generally considered unenforceable. Similarly, in Washington, a noncompetition covenant is void and unenforceable against an employee of a Marble Slab Creamery franchisee unless the employee's earnings exceed $100,000 per year (adjusted annually for inflation), or against an independent contractor unless their earnings exceed $250,000 per year (also adjusted annually for inflation).
These addenda to the Marble Slab Creamery Franchise Agreement highlight the importance of understanding the specific legal landscape of the state in which the franchise operates. Franchisees should consult with legal counsel to ensure compliance with local laws and to fully understand their rights and obligations regarding non-competition covenants.