In Washington, are any provisions in the Stretch Zone franchise agreement void and unenforceable?
Stretch_Zone Franchise · 2025 FDDAnswer from 2025 FDD Document
Covenants.** 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 provision contained in the franchise agreement or elsewhere that conflicts with these limitations is void and unenforceable in Washington.
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- Nonsolicitation Agreements. RCW 49.62.060 prohibits a franchisor from restricting, restraining, or prohibiting a franchisee from (i) soliciting or hiring any employee of a franchisee of the same franchisor or (ii) soliciting or hiring any employee of the franchisor. As a result, any such provisions contained in the franchise agreement or elsewhere are void and unenforceable in Washington.
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- Questionnaires and Acknowledgments. No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- Prohibitions on Communicating with Regulators. Any provision in the franchise agreement or related agreements that prohibits the franchisee from communicating with or complaining to regulators is inconsistent with the express instructions in the Franchise Disclosure Document and is unlawful under RCW 19.100.180(2)(h).
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- Advisory Regarding Franchise Brokers. Under the Washington Franchise Investment Protection Act, a "franchise broker" is defined as a person that engages in the business of the offer or sale of franchises. A franchise broker represents the franchisor and is paid a fee for referring prospects to the franchisor and/or selling the franchise. If a franchisee is working with a franchise broker, franchisees are advised to carefully evaluate any information provided by the franchise broker about a franchise.
Source: Item 8 — Receipts. Any sale made must be in compliance with § 683(8) of the Franchise Sale Act (N.Y. Gen. Bus. L. § 680 et seq.), which describes the time period a Franchise Disclosure Document (offering prospectus) must be provided to a prospective franchisee before a sale may be made. New York law requires a franchisor to provide the Franchise Disclosure Document at the earliest of the first personal meeting or ten (10) business days before the execution of the franchise or other agreement or the payment of any consideration that relates to the franchise relationship. (FDD pages 99–263)
What This Means (2025 FDD)
According to the 2025 Stretch Zone Franchise Disclosure Document, several provisions within the franchise agreement may be void and unenforceable in Washington state. These stipulations are designed to protect franchisees and align the agreement with Washington law.
Specifically, any noncompetition covenant against an independent contractor of a Stretch Zone franchisee is void and unenforceable if the contractor's annualized earnings from the party seeking enforcement do not exceed $250,000. This amount is subject to annual adjustments for inflation. Additionally, Stretch Zone is prohibited from restricting a franchisee from soliciting or hiring employees of either another Stretch Zone franchisee or Stretch Zone itself. Any clauses conflicting with these limitations are unenforceable in Washington.
Furthermore, any statement, questionnaire, or acknowledgment signed by a Stretch Zone franchisee cannot waive claims under Washington's franchise law, including claims of fraud, or disclaim reliance on statements made by Stretch Zone or its representatives. Provisions that prohibit a franchisee from communicating with or complaining to regulators are also unenforceable under Washington law. These protections ensure that franchisees retain their rights under state law and can freely communicate with regulatory bodies.
These stipulations are formalized in the Washington Addendum to the Franchise Agreement, which takes precedence over conflicting terms in the standard agreement. This addendum applies if the franchise offer is accepted in Washington, the franchisee is a Washington resident, or the franchised business operates in Washington. In case of conflicting laws, the Washington Franchise Investment Protection Act prevails, further safeguarding the franchisee's rights.