When is it lawful for My Salon Suite to repurchase a franchisee's business?
My_Salon_Suite Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 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.
Source: Item 17 — (r) of the FDD and Section 13 of the Franchise Agreement disclose the existence of certain covenants restricting competition to which Franchisee must agree. The Commissioner has held that covenants restricting competition contrary to Section 9-08-06 of the North Dakota Century Code, without further disclosing that such covenants may be subject to this statue, are unfair, unjust, or inequitable within the intent of Section 51-19-09 of the North Dakota Franchise Investment Law. The FDD and the Franchise Agreement are amended accordingly to the extent required by law. (FDD pages 230–274)
What This Means (2025 FDD)
According to My Salon Suite's 2025 Franchise Disclosure Document, certain regulations apply regarding the franchisor's ability to repurchase a franchisee's business, particularly in Washington state. Specifically, provisions that allow My Salon Suite to repurchase a franchisee's business during the franchise term without the franchisee's consent are considered unlawful under Washington law (RCW 19.100.180(2)(j)).
However, there is an exception: My Salon Suite can repurchase the franchise if the termination is for "good cause." This means that if a franchisee violates the franchise agreement or fails to meet certain performance standards, My Salon Suite may have the right to buy back the business. The definition of "good cause" is critical here, as it determines the circumstances under which My Salon Suite can legally repurchase the franchise.
This regulation protects franchisees from arbitrary or unfair buy-back provisions, ensuring that My Salon Suite cannot simply repurchase a successful franchise without a legitimate reason. Prospective franchisees in Washington should carefully review the franchise agreement and any related agreements to understand what constitutes "good cause" for termination and repurchase. It is advisable to seek legal counsel to fully understand their rights and obligations under Washington's franchise laws.