In Washington, what is the minimum annualized earnings threshold for an independent contractor of a Southern Steer franchisee for a noncompetition covenant to be enforceable?
Southern_Steer Franchise · 2025 FDDAnswer from 2025 FDD Document
ransfer.
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 and Multi-Unit Development or elsewhere that conflict with these limitations are void and unenforceable in Wa
Source: Item 5 — and 7 of the FDD, Section 3.1 of the Franchise Agreement and Section 4.1 of the Multi-Unit Development Agreement are hereby amended to state that payment of the initial franchise fee and development fee will be deferred until We have satisfied Our pre-opening obligations, and You have commenced business operations. (FDD pages 168–290)
What This Means (2025 FDD)
According to the 2025 Southern Steer Franchise Disclosure Document, in the state of Washington, a noncompetition covenant is void and unenforceable against an independent contractor of a franchisee if the independent contractor's earnings from the party seeking enforcement, when annualized, do not exceed $250,000 per year. This amount will be adjusted annually for inflation.
This means that if a Southern Steer franchisee in Washington wants to enforce a non-compete agreement against an independent contractor, the contractor must be earning at least $250,000 annually. If the contractor earns less than this threshold, the non-compete agreement is not legally enforceable.
This provision is specific to Washington State law (RCW 49.62.030) and is designed to protect workers from overly restrictive non-compete agreements, especially when their income is below a certain level. Southern Steer acknowledges that any conflicting provisions in their standard franchise agreement are void and unenforceable in Washington, ensuring compliance with state law.