For Pump It Up franchisees, what happens to the $250,000 earnings threshold for non-competition covenants?
Pump_It_Up Franchise · 2025 FDDAnswer from 2025 FDD Document
Washington.
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- A release or waiver of rights executed by a franchisee may not include rights under the Washington Franchise Investment Protection Act or any rule or order thereunder except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act, or rights or remedies under the Act such as a right to a jury trial, may not be enforceable.
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- Transfer fees are collectable to the extent that they reflect the franchisor's reasonable estimated or actual costs in effecting a transfer.
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- Pursuant to RCW 49.62.020, a noncompetition covenant is void and unenforceab
Source: Item 23 — RECEIPTS (FDD pages 60–225)
What This Means (2025 FDD)
According to the 2025 Pump It Up FDD, the $250,000 earnings threshold relates to the enforceability of non-competition covenants for independent contractors working for a Pump It Up franchisee in Washington state. Specifically, a non-competition covenant is void and unenforceable against an independent contractor if their annualized earnings from the franchisee do not exceed $250,000 per year. This amount will be adjusted annually for inflation. This protection is provided under RCW 49.62.030.
This means that Pump It Up franchisees in Washington cannot enforce non-compete agreements against independent contractors who earn less than $250,000 annually. Any provisions in the franchise agreement or other documents that conflict with this limitation are void and unenforceable in Washington. This is a significant consideration for franchisees in Washington who rely on independent contractors and wish to restrict their ability to work for competing businesses after their engagement ends.
For prospective Pump It Up franchisees, especially those planning to operate in Washington, it's crucial to understand these limitations on non-competition covenants. They should factor this into their business planning and consider alternative methods for protecting their business interests, such as confidentiality agreements or other contractual provisions that do not run afoul of Washington law. Franchisees should consult with legal counsel to ensure their agreements comply with Washington state law.