Will the earnings thresholds for non-competition covenants related to Punch King Fitness franchisees in Washington be adjusted annually?
Punch_King_Fitness Franchise · 2024 FDDAnswer from 2024 FDD Document
n or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. 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.
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,
Source: Item 22 — CONTRACTS (FDD pages 56–215)
What This Means (2024 FDD)
According to Punch King Fitness's 2024 Franchise Disclosure Document, the earnings thresholds related to non-competition covenants for employees and independent contractors of franchisees in Washington State will be adjusted annually for inflation. Specifically, a non-competition covenant is unenforceable against an employee if their annualized earnings from the party seeking enforcement exceed $100,000 per year. For independent contractors, this threshold is $250,000 per year.
This means that if a Punch King Fitness franchisee in Washington wants to enforce a non-compete agreement against a former employee or contractor, those individuals must have been earning above these annually adjusted thresholds. If their earnings were below these amounts, the non-compete agreement is void and unenforceable under Washington law.
This provision protects lower-earning workers from being unduly restricted in their future employment or contracting opportunities. It also means that Punch King Fitness franchisees operating in Washington need to be aware of these evolving thresholds when drafting and enforcing non-competition agreements, as the specific dollar amounts will change each year with inflation. Franchisees should consult with legal counsel to ensure their agreements comply with current Washington state law.