National Franchise Team Secures Injunctive Relief Despite New Law Restricting Non-Competition Provisions

April 2020

A national team including Portland Partner Greg Lockwood, New Jersey Partner Peter Siachos, with the assistance of Washington, D.C. Partner Julia Whitelock and Portland associate David Merryman on brief, recently secured a temporary restraining order and preliminary injunction against a franchisee, who continued to a operate a business in violation of her franchise agreement’s non-competition and non-solicitation provisions in the Western District of Washington in front of Judge Ricardo Martinez.

The Franchisor sued the Franchisee for violations of the franchise agreement and sought immediate injunctive relief to prevent further harm to the Franchisor’s brand. In its defense, the Franchisee asserted that the franchise agreement and its non-competition agreements were void because a new Washington law, 2019 WA H.B. 1450 (effective January 1, 2020), RCW 49.62.010 et seq., restricts the enforceability of non-competition agreements between independent contractors to those that do $250,000 or more in business with one another each year.

In a matter of first impression, the Judge found that the new law did not apply in this case, noting that the law was not intended to apply to franchise relationships and granted the Franchisor’s request for injunctive relief. This decision is groundbreaking for franchisors in Washington state who seek to enjoin former franchisees from competing in violation of the non-competition provisions contained in virtually all franchise agreements.