Franchise Laws for the State of Washington
Washington’s primary franchise legislation is the Franchise Investment Protection Act (FIPA), codified under RCW 19.100. This Act is designed to protect prospective franchisees by imposing comprehensive registration and disclosure requirements on franchisors.
So, before offering or selling a franchise in Washington, or to a Washington resident, or for a business to be located in the state, a franchisor must first register its Franchise Disclosure Document (FDD) with the Washington State Department of Financial Institutions, Securities Division, unless an exemption applies.
Note: If you plan on starting a franchise in the state of Washington, hire Washington Franchise Attorneys. They should be able to help you a lot.
Furthermore, this registration is an annual requirement and involves a filing fee, ensuring state review of the offering for compliance. FIPA also mandates that the franchisor deliver the FDD to the prospective franchisee at least fourteen calendar days before any binding agreement is signed or any payment is made, giving the buyer sufficient time for review.
Beyond the initial requirements, FIPA contains significant provisions that govern the relationship between the franchisor and franchisee once the agreement is in place. This is often referred to as “franchise relationship laws.”
Crucially, the Act imposes a duty of good faith in all dealings between the parties. FIPA includes a “Bill of Rights” for franchisees, making certain franchisor actions illegal and an unfair or deceptive act under state law.
Prohibitions include discriminating between franchisees on fees or prices without a reasonable justification. They also forbid refusing to renew a franchise without compensating the franchisee for the fair market value of their inventory, supplies, equipment, and goodwill.
Finally, these compensation requirements can be avoided under certain conditions, such as providing one year’s notice and waiving non-compete clauses.
The Act also restricts a franchisor’s ability to terminate a franchise prematurely, permitting termination only for “good cause.” This generally requires the franchisee to have failed to comply with a lawful and material provision and, in most cases, failed to cure the default after notice.
Furthermore, FIPA prohibits franchisors from requiring a franchisee to assent to a waiver of rights granted by the Act. Washington’s extensive protections mean its laws often provide greater rights to franchisees than federal law alone.
In the end, violations of FIPA can expose a franchisor to significant civil penalties and give the aggrieved franchisee the right to sue for damages.
Here is a list of franchise lawyers you can hire in the state of Washington (coming soon)
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Joel Libava, President.
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