EXISTENCE OF WASHINGTON DEALER/FRANCHISE TERMINATION, FRAUD AND NON-RENEWAL LAWS AND FRANCHISE INDUSTRY-SPECIFIC LAWS
In Washington, the following Dealer/Franchise Termination and Non-Renewal Laws, Fraud, and Franchise Industry-Specific Laws exist:
– Washington Has a Disclosure/Registration Franchise Law
– Washington Has a Relationship/Termination Franchise Law
– Washington Has a General Business Opportunity Franchise Law
– Washington Has an Alcoholic Beverage Wholesaler/Franchise Law
– Washington Has an Equipment Dealer/Franchise Law
– Washington Has a Gasoline Dealer/Franchise Law
– Washington Does Not Have a Marine Dealer/Franchise Law
– Washington Has a Motor Vehicle Dealer/Franchise Law
– Washington Does Not Have a Motorcycle Dealer/Franchise Law
– Washington Has a Recreational and Power Sports Vehicle Dealer/Franchise Law
– Washington Does Have a Restaurant Liability Law
– Washington Does Have a Professional Sports Franchise Law
Washington state’s Franchise Investment Protection Act (“FIPA”) governs franchise relationship issues, including terminations, non-renewals and transfers. Relative to other state franchise relationship statutes, the FIPA is broad-reaching in scope and detail.
Section 19.100.180 of the Washington Act sets out rights and prohibitions between franchisors and franchisees. The Section establishes the following specific rights and prohibitions. First, the parties must deal with each other in “good faith.” Second, the Act sets out what appears to be a Franchisee Bill of Rights by directing that it will be an “unfair or deceptive act or practice or an unfair method of competition” (and thereby an unlawful and a violation of the FIPA) for any person to:
(a) Restrict or inhibit the right of the franchisees to join an association of franchisees.
(b) Require a franchisee to purchase or lease goods or services of the franchisor or from approved sources of supply unless and to the extent that the franchisor satisfies the burden of proving that such restrictive purchasing agreements are reasonably necessary for a lawful purpose justified on business grounds, and do not substantially affect competition. Strangely, the Act specifically states that in determining liability under this section courts must be guided by the decisions of the courts of the United States interpreting and applying the antitrust laws of the United States.
(c) Discriminate between franchisees in the charges offered or made for royalties, goods, services, equipment, rentals, advertising services, or in any other business dealing, unless and to the extent that the franchisor satisfies the burden of proving that any classification of or discrimination between franchisees is: (i) Reasonable, (ii) based on franchises granted at materially different times and such discrimination is reasonably related to such difference in time, or is based on other proper and justifiable distinctions considering the purposes of this chapter, and (iii) is not arbitrary. Again, strangely, the FIPA statute allows a carve-out when it says that “nothing in (c) of this subsection precludes negotiation of the terms and conditions of a franchise at the initiative of the franchisees.”
(d) Sell, rent, or offer to sell to a franchisee any product or service for more than a “fair and reasonable price.”
(e) Obtain money, goods, services, anything of value, or any other benefit from any other person with whom the franchisee does business on account of such business unless such benefit is disclosed to the franchisee.
(f) If the franchise provides that the franchisee has an exclusive territory, which exclusive territory must be specified in the franchise agreement, for the franchisor to compete with the franchisee in an exclusive territory or to grant competitive franchises in the exclusive territory area previously granted to another franchisee.
(g) Require the franchisee to assent to a release, assignment, novation, or waiver which would relieve any person from liability imposed by this chapter, except as otherwise permitted by RCW 19.100.220.
(h) Impose on a franchisee by contract, rule, or regulation, whether written or oral, any standard of conduct unless the person so doing can sustain the burden of proving such to be reasonable and necessary.
(i) Refuse to renew a franchise without fairly compensating the franchisee for the fair market value, at the time of expiration of the franchise, of the franchisee's inventory, supplies, equipment, and furnishings purchased from the franchisor, and good will (not including personalized materials which have no value to the franchisor, and inventory, supplies, equipment and furnishings not reasonably required in the conduct of the franchise business). However, with regard to good will, the FIPA states that compensation need not be made to a franchisee for good will if (i) the franchisee has been given one year's notice of nonrenewal and (ii) the franchisor agrees in writing not to enforce any covenant which restrains the franchisee from competing with the franchisor. This provision does not prohibit a franchisor from offsetting against these amounts any amounts owed by the franchisee to the franchisor.
(j) Terminate a franchise prior to the expiration of its term except for “good cause.” In turn, good cause is defined as including, without limitation, the failure of the franchisee to comply with lawful material provisions of the franchise or other agreement between the franchisor and the franchisee and to cure such default after being given written notice thereof and a reasonable opportunity, which in no event need be more than thirty days, to cure such default, or if such default cannot reasonably be cured within thirty days, the failure of the franchisee to initiate within thirty days substantial and continuing action to cure such default. One explicit exception to these termination requirements is where the franchisee is a repeat offender, to wit: “after three willful and material breaches of the same term of the franchise agreement occurring within a twelve-month period, for which the franchisee has been given notice and an opportunity to cure as provided in this subsection, the franchisor may terminate the agreement upon any subsequent willful and material breach of the same term within the twelve-month period without providing notice or opportunity to cure.” A second exception to the termination obligations is that a franchisor may terminate a franchise without giving prior notice or opportunity to cure a default if the franchisee: (i) Is adjudicated a bankrupt or insolvent; (ii) makes an assignment for the benefit of creditors or similar disposition of the assets of the franchise business; (iii) voluntarily abandons the franchise business; or (iv) is convicted of or pleads guilty or no contest to a charge of violating any law relating to the franchise business. The FIPA also establishes purchase requirements upon termination for good cause, requiring that the franchisor purchase from the franchisee at a fair market value at the time of termination, the franchisee's inventory and supplies, exclusive of (i) personalized materials which have no value to the franchisor; (ii) inventory and supplies not reasonably required in the conduct of the franchise business; and (iii), if the franchisee is to retain control of the premises of the franchise business, any inventory and supplies not purchased from the franchisor or on his express requirement. Again, as before, under the termination provisions a franchisor is explicitly permitted to offset against amounts owed to a franchisee under this subsection any amounts owed by such franchisee to the franchisor.
In Washington, the following Dealer/Franchise Termination, Fraud and Non-Renewal Laws, and Franchise Industry-Specific Laws, are identified as follows:
Washington State Franchise Disclosure/Registration Laws
Franchise Investment Protection Act
Washington Revised Code, Title 19, Chap. 19.100, Sec. 19.100.010 through 19.100.940
Washington State Franchise Relationship/Termination Laws
Franchise Investment Protection Act (portion)
Washington Revised Code, Title 19, Chap. 19.100, Sec. 19.100.180 and 19.100.190
Washington State Business Opportunity Laws
Business Opportunity Fraud Act
Washington Revised Code, Title 19, Chapter 19.110, Sections 19.110.010 through 19.110.930
Washington Alcoholic Beverage Franchise/Wholesaler Laws
Washington malt beverages law
Wash. Rev. Code Tit. 19, Chap. 19.126, §19.126.010 to §19.126.901
Washington Equipment Franchise/Dealer Laws
Washington farm implements, machinery, and parts Franchise/Dealer law
Wash. Rev. Code Tit. 19, Chap. 19.98, §19.98.008 to §19.98.913
Washington Gasoline Franchise/Dealer Laws
Washington motor fuel Franchise/Dealer law
Wash. Rev. Code Tit. 19, Chap. 19.120, §19.120.010 to §19.120.906
Washington Marine Franchise/Dealer Laws
Washington has no Franchise Industry-Specific Law in this Market Niche
Washington Motor Vehicle Franchise/Dealer Laws
Washington motor vehicle Franchise/Dealer law
Wash. Rev. Code Tit. 46, Chap. 46.70, §46.70.180,and §46.70.190,and Wash. Rev. Code Tit. 46, Chap. 46.96, §46.96.010 to §46.96.900
Washington Motorcycle Franchise/Dealer Laws
Washington has no Franchise Industry-Specific Law in this Market Niche
Washington Recreational and Powersports Vehicle Franchise/Dealer Laws
Washington motorsports vehicles Franchise/Dealer law
Wash. Rev. Code Tit. 46, Chap. 46.93, §46.93.010 to §46.93.901
Washington Commonsense Consumption Act
Wash. Rev. Code, Tit. 7, Chap. 7.72, §7.72.070
Washington professional sports franchises law
Wash. Rev. Code, Tit. 35, Chap. 35.21, §35.21.695
Volvo Const. Equipment North America, LLC v. Clyde/West, Inc., United States District Court, W.D. Washington, at Seattle, October 20, 2014 (‘’FIPA establishes certain protections for franchisees, including, as relevant here, the requirement that a franchise can only be terminated for “good cause.” See RCW 19.100.180. FIPA does not, however, establish a remedy for violations of these protections. Red Lion Hotels Franchising, Inc. v. MAK, LLC, 663 F.3d 1080, 1091 (9th Cir.2011). Rather, a violation constitutes a per se “unfair or deceptive act or practice” that is actionable under the Washington Consumer Protection Act (“CPA”), RCW 19.86 et seq. Red Lion Hotels, 663 F.3d at 1091; Nelson v. Nat'l Fund Raising Consultants, Inc., 120 Wash.2d 382, 842 P.2d 473, 478 (Wash.1992); RCW 19.100.190(1). A violation of FIPA alone, however, does not automatically establish a violation of the CPA. Nelson, 842 P.2d at 478. To a establish a CPA claim, a plaintiff must show: (1) an unfair or deceptive trade practice (such as a violation of FIPA); (2) that occurs in trade or commerce; (3) an impact on the public interest; (4) injury to the plaintiff in his or her business or property; and (5) a causal link between the unfair or deceptive act and the injury suffered. Hangman Ridge Training Stables, Inc. v. Safeco Title Ins. Co., 105 Wash.2d 778, 719 P.2d 531, 535 (Wash.1986). Volvo argues that Clyde is unable to show an impact on the public interest as a matter of law because “breach of a private contract affecting no one but the parties to the contract is not an act or practice affecting the public interest.” (Volvo MSJ at 14 (quoting Hangman Ridge, 719 P.2d at 538).) There is, however, no bright line rule that private contract disputes cannot give rise to CPA claims. See Hangman Ridge, 719 P.2d at 538 (identifying factors relevant to evaluating the public interest in the context of private contract disputes). More importantly, “whether the public has an interest in any given action is to be determined by the trier of fact from several factors, depending upon the context in which the alleged acts were committed.” Id. at 537–38; see also Stephens v. Omni Ins. Co., 138 Wash.App. 151, 159 P.3d 10, 24 (2007) aff'd sub nom. Panag v. Farmers Ins. Co. of Washington, 166 Wash.2d 27, 204 P.3d 885 (2009) (“Whether the public has an interest is therefore an issue to be determined by the trier of fact.”); Cotton v. Kronenberg, 111 Wash.App. 258, 44 P.3d 878, 886 (2002). *5 Because the public interest element is a question of fact, Clyde is entitled to an opportunity to discover evidence that will support a finding in its favor. As discussed above, Clyde's opportunity to develop a factual record has been brief.”)
BP West Coast Products LLC v. SKR Inc., United States District Court, W.D. Washington, at Seattle, October 22, 2013 (“The anti-discrimination provisions of FIPA and GDBRA are substantially the same, making it unfair or deceptive for a franchisor to “[d]iscriminate between motor fuel retailers in the charges offered or made for royalties, goods, services ... or any other business dealing” unless the disparate treatment is reasonable, based on franchises granted at materially different times, and/or is not arbitrary. RCW 19.100.080(2)(c), RCW 19.120.080(2)(b). Claims under these provisions may only be brought as violations of the CPA. BP W. Coast Prods., LLC v. Shalabi, 2012 U.S. Dist. LEXIS 82879, *24, 2012 WL 2277843, at *8 (W.D.Wash. June 14, 2012). SKR contends BPWCP's actions were discriminatory when it allowed some dealers to operate stand-alone ARCO stations but required SKR to enter into both an ARCO dealership and an am/pm franchise agreement. (Dkt. No. 47 at 40–41.) SKR argues gasoline-only dealers are treated better than those with the ampm franchise *1118 agreement because they do not have to pay a $70,000 ampm fee, they do not pay a 14% royalty on inside sales, and they do not participate in mandatory sales programs. (Id.)
7 The facts as SKR allege do not amount to an anti-discrimination claim under FIPA or GDBRA. SKR does not complain it was treated differently than other ampm ARCO dealerships. Instead, it compares itself to entities that are not similarly situated, and the alleged discrimination goes back before the time of contracting. The FIPA discrimination provision is designed to govern the post-sale relationship between a franchisor and franchisee. Coast to Coast Stores, Inc. v. Gruschus, 100 Wash.2d 147, 150, 667 P.2d 619 (1983). SKR entered into an ampm franchise agreement, and cannot claim discrimination because others did not. A franchisor may have different franchises and run them differently. This Court has already held that under FIPA, “a parent company cannot be held liable for creating different rate structures among franchises operated under wholly separate trademarks.” Madison House, Ltd. v. Sotheby's Int'l Realty Affiliates, Inc., 2007 U.S. Dist. LEXIS 11654, *7–8, 2007 WL 564151, *2–3 (W.D.Wash. Feb. 20, 2007.) SKR entered into an ampm agreement, and cannot make an antidiscrimination claim on grounds others did not enter into the same franchise agreement and were thus treated differently. Summary judgment on the discrimination claims is GRANTED in favor of BPWCP.”)
BP West Coast Products LLC v. SKR Inc., United States District Court, W.D. Washington, at Seattle, October 22, 2013 (“Both FIPA and GDBRA prohibit franchisors from selling products to franchisees at a more than reasonable price. RCW 19.100.180(2)(d), RCW 19.120.180(2)(c). SKR alleges BPWCP violated these provisions by charging unreasonable prices for gas, beer, soda, salty snacks, and tobacco at the Vancouver station. (Dkt. No. 47 at 29–30.) The FIPA reasonable price provision does not apply if the franchisee is required by the franchise agreement to purchase products from a third party, unless the franchisors obtain undisclosed benefits from the third party as a result of the required product purchases. Nelson v. National Fund Raising Consultants, Inc., 120 Wash.2d 382, 389, 842 P.2d 473 (1992). GDBRA's reasonable price provision is similarly directed at the relationship between franchisor and franchisee. With respect to beer, soda, salty snacks and tobacco, it is undisputed these products were purchased by SKR from third party vendors. (Dkt. No. 93–1 at 21.) While SKR alleges in its counterclaims the prices it was charged by third party vendors, such as Costco, were higher “than they would pay if they simply went to Costco and brought the product directly,” nearly identical allegations in the context of anti-kickback violations were rejected as unsupported in the companion case BP W. Coast Prods. v. Shalabi. 2012 U.S. Dist. LEXIS 82879 at *29–30, 2012 WL 2277843 at *10. As in Shalabi, SKR makes only broad conclusory statements supported by no facts or evidence before the Court. In regards to gasoline prices, SKR waived its reasonable price claims by failing to notify BPWCP of non-conformities in compliance with the Vancouver GDA. The GDA requires the buyer notify BPWCP in writing of any nonconformity in the price of gasoline delivered by BPWCP within thirty calendar days of *1119 delivery. (Dkt. No. 94–1 at 103.) The same provision says the buyer “waives any claim against BPWCP based on any nonconformity of which Buyer does not so notify BPWCP.” (Id.) This is consistent with the Washington Uniform Commercial Code, which also imposes a duty on a buyer to notify the seller within a reasonable period of time if it is rejecting goods that do not conform to the parties' contract. RCW 62A.2–606(1)(b). SKR does not dispute it never notified BPWCP of price nonconformities within the allotted thirty days after delivery and sold the gasoline it was delivered, thereby accepting the goods. For these reasons, summary judgment is GRANTED in favor of BPWCP on the reasonable price claims.”)
Saleemi v. Doctor's Associates, Inc., Supreme Court of Washington, En Banc, January 17, 2013, 176 Wash.2d 368292 P.3d 108 (“¶ 26 Judge Van Doorninck ruled that there would be no limit on remedies. Under FIPA, “[t]he commission of any unfair or deceptive acts or practices or unfair methods of competition prohibited by RCW 19.100.180 as now or hereafter amended shall constitute an unfair or deceptive act or practice under the provisions of chapter 19.86 RCW,” the CPA. RCW 19.100.190(1). Under Washington's CPA, actual and punitive damages are available. RCW 19.86.090.7 This court has been reluctant to allow CPA rights to be waived by preinjury contract. See, e.g., McKee, 164 Wash.2d at 386, 191 P.3d 845; Dix, 160 Wash.2d at 838, 161 P.3d 1016; Scott, 160 Wash.2d at 858, 161 P.3d 1000; RCW 19.100.190(1). Under the franchise agreements, damages were limited to compensatory damages the greater of either $100,000 or franchise and royalty fees paid during the previous three years. Thus, this remedy limitation provision may well be unenforceable under Washington law. RCW 19.100.190(1); RCW 19.86.090, see also Zuver, 153 Wash.2d at 318–19, 103 P.3d 753 (finding one-sided limitation on damages substantively unconscionable and unenforceable). But see McKee, 164 Wash.2d at 401, 191 P.3d 845 (finding limitation on punitive damages in a long distance contract not unconscionable). ¶ 27 Assuming for the sake of argument that the trial judge should not have struck the damages limit in the arbitration agreement as unenforceable under Washington law, the face of the arbitration award shows that the arbitrator was keenly aware of the contractual damages. The arbitrator's interim award provides: “Claimant DAI shall pay to respondents ‘compensatory damages' as that *384 term is defined in section 17 of exhibit 52 [the damages limitation clause]. They may choose either option.” CP at 290. Therefore, the plaintiffs were limited to either the $100,000 limit option or franchise fees and royalties limit option. ¶ 28 The arbitrator awarded compensatory damages in the amount of $230,000 plus attorney fees and costs. At issue are three franchise agreements for three different sandwich shops and each agreement has a limit of $100,000. DAI fails to show that the $100,000 limit is not cumulative for a **116 total of $300,000. Further, the limits are in the alternative, to be computed by calculating the franchise fees and royalties paid by the franchisees on the three sandwich shops over the last three years. There is no evidence in the record before us that an award of $230,000 exceeds the franchise fees and royalties paid in the last three years. Therefore, DAI has not shown the arbitration award did not comply with the contractual limits and has not shown prejudice.”)
Fleetwood v. Stanley Steemer Intern. United States Court of Appeals, Ninth Circuit, August 9, 2011446 Fed.Appx. 8682011 WL 3468292 (“3. A violation of FIPA's good faith requirement in Revised Code of Washington § 19.100.180(1) is not an unfair or deceptive practice under the Consumer Protection Act (CPA). See RCW § 19.100.180(2) (listing “unfair or deceptive act[s]”) and § 19.100.190(1) (providing that “unfair or deceptive acts ... prohibited by RCW 19.100.180” are violations of the CPA). Further, there is no violation of the CPA, because, as experienced businessmen, Appellants cannot demonstrate the required public interest. Goodyear Tire & Rubber Co. v. Whiteman Tire, Inc., 86 Wash.App. 732, 935 P.2d 628, 635 (1997)”)
Danforth & Associates, Inc. v. Coldwell Banker Real Estate, LCC, United States District Court, W.D. Washington, at Seattle, February 3, 2011Not Reported in F.Supp.2d2011 WL 3387982011-1 Trade Cases P 77, 347 (“Next, Plaintiff alleges that 1) Defendant's rejection of Plaintiff's latest franchise request, 2) the no-hire provision, and 3) Defendant's allowance of a different set of standards for Bain amounted to bad faith and discrimination in violation of the Franchise Investment Protection Act. FIPA states that it is an unfair or deceptive act or practice or an unfair method of competition for any franchisor to: (c) Discriminate between franchisees in the charges offered or made for royalties, goods, services, equipment, rentals, advertising services, or in any other business dealing, unless and to the extent that the franchisor satisfies the burden of proving that any classification of or discrimination between franchisees is: (i) Reasonable, (ii) based on franchises granted at materially different times and such discrimination is reasonably related to such difference in time, or is based on other proper and justifiable distinctions considering the purposes of this chapter, and (iii) is not arbitrary. However, nothing in (c) of this subsection precludes negotiation of the terms and conditions of a franchise at the initiative of the franchisees. RCW 19.100.180(2)(c). Defendant responds that the different treatment of franchisees is not discrimination because a) FIPA expressly contemplates territorial protection for different franchisees, b) Plaintiff initiated the idea of a no-hire provision, and c) the Plaintiff's agreements were signed at materially different times from the Bain agreements. With respect to Defendant's decision not to grant Plaintiff an additional franchise, the Court agrees with Defendant that Plaintiff has failed to state a claim. Plaintiff acknowledges in its complaint that Defendant had granted Bain an exclusive right to expand in King County weeks prior to signing any agreement with Plaintiff. (Complaint ¶¶ 15–16 (Dkt. No. 1).) FIPA explicitly protects exclusive territorial grants. See RCW 19.100.180(2)(f). It is implausible to suggest that FIPA permits an arrangement in one section and prohibits it in another. With respect to the to the no-hire provision, however, the Court finds that Plaintiff has succeeded in stating a claim. Although Plaintiff does admit that it suggested a no-hire provision in exchange for the ability to open a new office, Plaintiff then claims that this suggestion was “forced upon” it. (Reply 19 (Dkt. No. 16).) Drawing all reasonable inferences from Plaintiff's account of the facts, it is plausible that this treatment was discriminatory. With respect to the different set of standards between the franchisees, the Court finds that Plaintiff has succeeded in stating a claim. Defendants concede that Bain is subject to a different set of standards, but argue that the contract with Bain was signed at a materially different time than the agreements with Plaintiff. At the motion to dismiss stage, the Court must accept Plaintiff's assertion that the contracts were signed at materially similar times. And even if they were not, Defendant must still show that the different treatment was not arbitrary.”)
JM Vidal, Inc. v. Texdis USA, Inc., United States District Court, S.D. New York.February 2, 2011764 F.Supp.2d 599 (“C. Plaintiffs Claim Under WFIPA Section 180(1) Raises Genuine Factual Issues JMV alleges that Texdis violated the good-faith provision of the WFIPA, section 180(1), which requires that a franchisor and franchisee “shall deal with each other in good faith,” Wash. Rev. Code. § 19.100.180(1). Washington courts have held that the duty of good faith imposed by the WFIPA “does not operate to create rights not contracted for, nor does it override the express terms of a contract.” Doyle v. Nutrilawn U.S., Inc., No. C09–0942JLR, 2010 WL 1980280, at *8, 2010 U.S. Dist. LEXIS 48613, at *23 (W.D.Wash. May 17, 2010) (internal quotations and citation omitted). 6 Viewed in the light most favorable to Plaintiff, the record raises genuine factual issues as to whether Texdis dealt with JMV in good faith. JMV has identified specific sections of the Franchise Agreement that Defendants allegedly breached—namely, those related to advertising and the supply of merchandise—and has presented some evidence that Defendants failed to perform these obligations in good faith. Cf. id. at *8, 2010 U.S. Dist. LEXIS 48613 at *23–24 (granting summary judgment for franchisor on franchisees' WFIPA good-faith claim because franchisees “do not identify any section of the Franchise Agreement that they believe [franchisor] breached, [and] do not point to any obligation imposed by the Franchise Agreement that they believe [franchisor] failed to carry out in good faith”). There is, for example, evidence in the record from which a reasonable jury could conclude that Texdis' efforts to promote the JMV Store's opening were half-hearted at best, and that, more broadly, its advertising on behalf of the Store was knowingly insufficient to afford it a chance at success. This and other evidence—such as Texdis' pushing for a ten-year lease when the term of its Agreement with JMV was only five years; Texdis' alleged insistence upon the construction of a $400,000 mezzanine not included in the original drawings; its apparent failure to provide Store employees with any U.S.-based operational support; and the strikingly poor track record of its other U.S. franchises (and, in particular, the rate at which they have been closed or repurchased)—support Plaintiff's allegation that Texdis may have been content to see the JMV Store fail, and then attempt to repurchase it at a significantly depressed price. That is the sort of “unfair” business practice that the WFIPA seeks to prevent. Texdis' arguments in support of its motion for summary judgment on JMV's section 180(1) claim are few and flimsy. Texdis asserts that the WFIPA should be *616 “strictly construed” because it is “a statute in derogation of common law,” and that the good-faith claim fails because Plaintiff does not allege a violation of one of the ten franchisor practices specifically prohibited by section 180(2). (Mem. in Supp. of Defs.' Mot. for Summ. J., Feb. 12, 2010 (“Defs.' Mem.”), at 7.) But sections 180(1) and 180(2) are separate provisions of the WFIPA. Section 180(2) sets forth a list of ten “unfair” or “deceptive” practices that are illegal per se; it does not purport to identify every act that could constitute a breach of a franchisor's good-faith obligation. See Coast to Coast Stores (Cent. Org.) v. Gruschus, 100 Wash.2d 147, 667 P.2d 619, 629 (1983) (explaining that section 180(2) “does not require any type of bad faith,” but rather “sets out specific practices which are illegal on their own,” while “[section 180(1) ] is a separate portion of the statute imposing upon a franchisor the obligation to act in good faith”). Texdis also conclusorily asserts that “all of JMV's alleged Section 180(1) violations conflict with the parties' obligations under the Franchise Agreement.” (Defs.' Mem. at 7.) To the extent that certain of Plaintiff s good-faith allegations seek to create extra-contractual obligations—which Washington courts have made clear section 180(1) cannot do, see Doyle, 2010 WL 1980280, at *8, 2010 U.S. Dist. LEXIS 48613, at *23, such allegations are ignored. Plaintiff's claim under WFIPA section 180(1), properly considered as predicated on Texdis' alleged failure to perform its contractual obligations in good faith, raises genuine issues of material fact, for the reasons set forth above. Thus, Defendants' motion for summary judgment on JMV's claim for breach of the WFIPA's good-faith obligation is denied.”)
Fleetwood v. Stanley Steemer Intern., Inc., United States District Court, E.D. Washington. July 2, 2010725 F.Supp.2d 1258 (“As to the alleged contractual breach, Mr. Rozmus's complaint alleges that stanley Steemer breached its obligation to deal with Mr. Rozmus in good faith by failing to process the Yakima area franchise right transfer application on a timely basis. (Am. Compl. ¶ 5.27.)
Defendant argues that the Franchise Agreement and Franchise Termination Agreement expressly prohibit Mr. Rozmus from selling his franchise rights if he was in default. It is undisputed that Mr. Rozmus was in default under the Franchise *1274 Agreement and Franchise Termination Agreement at the time of this alleged application. Defendant explains that because Mr. Rozmus did not satisfy his financial obligations under the contracts, he was contractually prohibited from selling his franchise rights. Defendant concludes there is no factual or legal support for the claim that Stanley Steemer breached any contractual obligations. Stanley Steemer has performed all of its obligations under the contracts.
9 The Court has found, that Stanley Steemer properly exercised its contractual right to terminate Mr. Rozmus's franchise rights. Plaintiffs have not shown that Defendant arguably breached its contractual obligations under the facts of this case. As for the alleged breach of the implied covenant of good faith and fair dealing portion of this claim, the Plaintiffs appear to be arguing the common law principle, inasmuch as the duty of “good faith and fair dealing” is inherent in every business relationship.
10 The covenant of good faith and fair dealing is applied in franchising as a litigation tool because of the doctrine's malleable nature and uncertainties inherent in franchise relationships.13 The covenant is also applied to both parties to a franchise agreement. The courts recognize that the good faith obligation is most often applied to the party assuming discretionary control in the agreement. Id. In this case, Stanley Steemer terminated Plaintiffs for good cause, and specifically for defaulting on their obligations. Under FIPA, the franchisor needs “good cause” to terminate the franchise. “Good cause” is often defined to be the failure of the franchisee to comply with a lawful provision of the franchise agreement after being given the opportunity to cure that failure. RCW 19.100.180(2)(j).
Additionally, Defendant Stanley Steemer's failure to process the Yakima area franchise right transfer application was based on Plaintiffs' default. The Franchise Agreement and Franchise Termination Agreement expressly prohibited Mr. Rozmus from selling his franchise rights if he was in default. The applicable provision of the Franchise Agreement reads: Article XII ¶ A: Assignment Conditions. Franchise Owner's interest in, and obligations under, this Agreement may be assigned, transferred, pledged, mortgaged, hypothecated, or in any manner encumbered only if ... Franchise Owner has paid all obligations due to Stanley Steemer and any other creditor arising from the activities permitted under this Agreement.”)
Fleetwood v. Stanley Steemer Intern., Inc., United States District Court, E.D. Washington. July 2, 2010725 F.Supp.2d 1258 (“Mr. Rozmus's first contention that FIPA was violated regarding lack of notice and opportunity to cure has been analyzed *1276 above, in which the Court found no violation. The second allegation of a FIPA violation concerns the good faith provision of 19.100.180(1) of FIPA. This provisions reads: “The parties shall deal with each other in good faith.” Section (1), however, does not override express terms of a written contract: “While the scope of the contractual duty of good faith may have been unclear when FIPA was enacted, Washington courts have since recognized that the duty of good faith does not operate to create rights not contracted for, nor does it override the express terms of a contract.” Doyle v. Nutrilawn U.S., Inc., 2010 WL 1980280, at *8 (W.D.Wash. May 17, 2010) (citations omitted).
16 Plaintiffs have presented no evidence to demonstrate that Stanley Steemer violated its good faith obligations. The Plaintiffs argue predominantly that between Mr. Fleetwood and Mr. Bates (the CEO whom Mr. Fleetwood considered to be a friend), the latter made repeated assurances that he would protect Mr. Fleetwood's franchise from termination, that he was the only person at Stanley Steemer with the power to terminate, and that Stanley Steemer would make his franchise work. In the opposition brief to Defendant's summary judgment motion regarding Rozmus Plaintiffs, Mr. Rozmus argues that he too trusted and relied on Stanley Steemer's assurances that it would “make it work” and everything would be “ok.” Ct. Rec. 119, at 34.
The Court finds that these statements are akin to supportive commentary and opinion rather than words rising to the level of extra-contractual promises. The evidence indicates that Plaintiff Rozmus (and Plaintiff Fleetwood) were independent businessmen with years of experience with the Stanley Steemer system and franchise operation. Having found no breach of the implied covenant of good faith and fair dealing, this Court finds that this claim must be denied also and summary judgment granted in favor of Defendant.”)
Doyle v. Nutrilawn U.S., Inc., United States District Court, W.D. Washington, at Seattle, May 17, 2010 (“d. Breach of the Duty of Good Faith and Fair Dealing Claims -- The court grants summary judgment in favor of Nutrilawn with respect to the Doyles' fourth and fifth causes of action for breach of the duty of good faith under the FIPA and breach of the covenant of good faith and fair dealing. In Washington, there is in every contract an implied duty of good faith and fair dealing. Badgett v. Sec. State Bank, 116 Wash.2d 563, 807 P.2d 356, 360 (Wash.1991); Carlile v. Harbour Homes, Inc., 147 Wash.App. 193, 194 P.3d 280, 291 (Wash.Ct.App.2008). This duty “requires only that the parties perform in good faith the obligations imposed by their agreement.” Badgett, 807 P.2d at 360. By contrast, the duty neither obligates a party to accept a material change in the terms of the contract, nor injects substantive terms into the contract. Id. The FIPA also imposes an obligation that the franchisor and the franchisee “shall deal with each other in good faith,” and enumerates specific proscribed conduct. RCW 19.100.180(1); see Corp. v. Atl. Richfield Co., 122 Wash.2d 574, 860 P.2d 1015, 1019 (Wash.1993). “While the scope of the contractual duty of good faith may have been unclear when FIPA was enacted, Washington courts have since recognized that the duty of good faith does not operate to create rights not contracted for, nor does it override the express terms of a contract.” Douglas C. Berry, David M. Byers & Daniel J. Oates, State Regulation of Franchising: The Washington Experience Revisited, 32 SEATTLE U.L.REV. 811, 871 (2009) (citing Badgett, 807 P.2d at 360). Here, the Doyles have presented no evidence to demonstrate that Nutrilawn violated its good faith obligations. Specifically, the Doyles do not identify any section of the Franchise Agreement that they believe Nutrilawn breached, do not point to any obligation imposed by the Franchise Agreement that they believe Nutrilawn failed to carry out in good faith, and do not argue that Nutrilawn violated any of the specific provisions of RCW 19.100.180(2). As the Washington Supreme Court teaches, the duty of good faith and fair dealing “arises only in connection with terms agreed to by the parties.” Badgett, 807 P.2d at 360. The Doyles, however, have not shown how Nutrilawn failed to act in good faith in connection with the terms of the Franchise Agreement. On this record, even viewing the evidence in the light most favorable to the Doyles, the court concludes that Nutrilawn has satisfied its burden to show that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.”)
Tolle Furniture Group, LLC v. La-Z-Boy Inc., United States District Court, W.D. Washington, at Seattle, July 17, 2009, 2009 WL 2160981 (“Plaintiff contends that it is likely to succeed on the merits of its claim because defendant has not complied with the FIPA. Even assuming that the FIPA applies, plaintiff has not shown a likelihood of success. First, the FIPA permits a franchisor to terminate a franchise for “good cause:” Good cause shall include, without limitation, the failure of the franchisee to comply with lawful material provisions of the franchise or other agreement between the franchisor and the franchisee and to cure such default after being given written notice thereof and a reasonable opportunity, which in no event need be more than thirty days, to cure such default, or if such default cannot reasonably be cured within thirty days, the failure of the franchisee to initiate within thirty days substantial and continuing action to cure such default: PROVIDED, That after three willful and material breaches of the same term of the franchise agreement occurring within a twelve-month period, for which the franchisee has been given notice and an opportunity to cure as provided in this subsection, the franchisor may terminate the agreement upon any subsequent willful and material breach of the same term within the twelve-month period without providing notice or opportunity to cure: RCW 19.100.180(2)(j). Plaintiff does not dispute that it has over $5 million in past-due invoices owed to LZB. Therefore, it has failed to comply with Section 10.2(a) of the Retailer Agreement, which addresses the failure to pay monies due. Despite that provision and the size of its debt, plaintiff contends that good cause is lacking because it had an agreement with LZB to defer payment of its debt. Specifically, plaintiff contends that LZB promised to “financially support a build-out of the Seattle Market to all New Generation Gallery Stores.” Declaration of Barbara Spotts, (Dkt.# 10) at ¶ 4. Plaintiff apparently believed that it could repay its debt to LZB from store profits once they were generated. Motion at p. 6 (citing A. Spotts Decl. at ¶ 10, Ex. E); see also A. Spotts Decl. at ¶ 20 (“At the time that Tolle entered the [Seattle] market, LZB and Tolle agreed that the parties would work together to build out the Seattle market and invest capital to gain market share and voice, as well as open new stores .... LZB would then have a preferred right to all profits generated by the stores until the capital expenses were paid.”). However, that understanding was not based on any written agreement. Nor has plaintiff shown that any oral agreement is enforceable. Plaintiff does not state how long LZB was expected to shoulder the debt. Plaintiff's description of the conduct and conversations that underlie plaintiff's assumption is vague. Furthermore, the alleged conversations occurred before plaintiff executed the Retailer Agreements. None of the Retailer Agreements includes a term that supports plaintiff's assertion. To the contrary, they all contain merger clauses. A. Spotts Decl., Ex. A at § 11.11 (“There are no representations, undertakings, agreements, terms or conditions not contained or referred to herein.”). Moreover, when Tolle planned to enter the Seattle market, Andrew Spotts sent LZB a letter detailing Tolle's “funding sources for both capital and building funds.” Declaration of Greg White, (Dkt.# 16). Neither the letter nor its attachments referenced LZB as a funding source, nor did they reference any agreement to defer payments. In 2008, LZB twice wrote to Tolle referencing the millions of dollars past due; plaintiff did not contest the amounts past due.1 All of this evidence shows that plaintiff is not likely to prevail on its claim that the parties agreed to defer payment of the debt. Second, plaintiff's argument that LZB violated the FIPA is premised on the faulty assertion that defendant was required to give plaintiff three notices of its breach before terminating the relationship. The statute, however, states that the franchisor may terminate the relationship without notice after “three willful and material breaches of the same term of the franchise agreement occurring within a twelve month period.” RCW 19.100.180(2)(j). However, in this case, LZB is not attempting to terminate without notice. In fact, it gave the required notice. The statute requires that the franchisor provide “written notice [of default] and a reasonable opportunity, which in no event need be more than thirty days, to cure such default.” Id. Plaintiff has had more than thirty days to attempt to cure its debt, but it has not taken any steps to do so after receiving the notice. Nor has it described any steps it plans to take or could take to cure the debt. Instead, plaintiff described cure measures it attempted around October 2008, and its owners have explained that they unsuccessfully sought additional funding from LZB. None of those efforts reflects a current and viable plan to mitigate plaintiff's significant debt. Accordingly, plaintiff has not shown a likelihood of success on the merits. Nevertheless, the Court will evaluate the remainder of the factors.”)
Madison House, Ltd. v. Sotheby's Intern. Realty Affiliates, United States District Court, W.D. Washington, at Seattle.February 20, 2007, 2007 WL 564151 (“FIPA “discrimination” claim -- Cendant Real Estate Services Group and Cendant Corporation are claimed to violate RCW 19.100.180(2)(c) of FIPA. The statute makes it unlawful for a franchisor to discriminate between franchisees in “the charges made or offered or royalties, goods, services, equipment, rentals, advertising services, or any other business dealing” unless there is a reasonable justification for discrimination. Plaintiffs claim Cendant violates this statute by charging different rates among their various real estate brokerage franchises. There is no allegation that Sotheby's (Plaintiffs' direct franchisor) discriminated between the different Sotheby's franchisees. *3 There is no case law interpreting RCW 19.100.180 in the context of separate franchises owned by a single company. Although Defendants make an attempt to analogize their situation to a Florida case involving car dealerships (Bert Smith Oldsmobile, Inc. v. General Motors Corp., 2005 WL 1210993, Bus. Franchise Guide (CCH) ¶ 13, 094 (M.D.Fla. May 20, 2005)), it is not an analogy which survives scrutiny. The Smith case concerns a statutory scheme aimed at automobile dealers who had been licensed “to transact business pertaining to motor vehicles of a particular line-make.” Fla. Stat. § 320.60(1), (11). The franchise structure defined by FIPA is not as specific or definitive as the Florida statute, and the Smith case factually does not fit the circumstances of this litigation. Nevertheless, the Court finds that, under the FIPA statute, a parent company cannot be held liable for creating different rate structures among franchises operated under wholly separate trademarks. FIPA defines “franchisor” was “the person who grants a franchise to another person.” Sotheby's is the franchisor of Plaintiffs. One of the statutory requirements of a “franchise” is that “the operation of the business is substantially associated with a trademark ...” (RCW 19.100.010(4)(a)(ii)). Case law recognizes that “the franchisor grants the right to produce and sell goods or services under its trade name and trademark.” Lobdell v. Sugar ‘n Spice, Inc., 33 Wn.App. 881, 887–88 (1983). Within these statutory and case parameters, none but Sotheby's can be held to be the franchisor of Plaintiffs. It is the Sotheby's trade name and trademark that Plaintiffs paid for. Cendant at one time operated franchises in the real estate, hotel and car rental businesses. Creating uniform rate structures among these unrelated enterprises would not make sense. Plaintiffs also attempt to argue that the parties should be viewed as “franchisors” and “sub-franchisors” and the anti-discrimination statute should apply to both of those categories of entrepreneurs. But there is a very specific statutory definition of “sub-franchise” and “sub-franchisor” (see RCW 19.100.010) and there are no allegations in the complaint sufficient to establish a franchisor/sub-franchisor relationship between Sotheby's and the Cendant defendants (who are described only as parent or indirect parent companies of Sotheby's; Complaint, ¶¶ 4.1, 4.5)).
Womack v. Southland Corp., Court of Appeals of Washington, Division 3.June 13, 1996, 1996 WL 325716 (“An appellate court may direct a judgment on the merits in a declaratory proceeding notwithstanding the trial court's never having reached the merits if (a) there is a justiciable controversy, (b) the written instrument to be construed is unambiguous, and (c) the court has everything before it necessary to declare the rights of the parties. Richardson v. Danson, 44 Wn.2d 760, 764, 270 P.2d 802 (1954). Paragraph 10 clearly states that receipts are to be deposited daily, except for cash paid directly to third parties for purchases or operating expenses. It is not ambiguous. When a contract provision is unambiguous, its clear meaning controls. Danielson v. City of Seattle, 108 Wn.2d 788, 794, 742 P.2d 717 (1987). Ambiguity will not be read into it. Syrovy v. Alpine Resources, 122 Wn.2d 544, 551, 859 P.2d 51 (1993). Mr. Womack's payment and reimbursement practice deviates from the procedure specified in the agreement and the agreement defines a material breach as a franchisee's failure “to properly record, deposit, deliver, or expend and report Receipts.” Notwithstanding the presence of a justiciable controversy and unambiguous contract terms, we decline to make a determination on the merits because the record does not contain everything necessary to declare the rights of the parties. Mr. Womack contends the contract provision at issue violates RCW 19.100.180(h), which prohibits a franchisor from imposing “any standard of conduct unless the person so doing can sustain the burden of proving such to be reasonable and necessary.” However, the only evidence regarding the reasonableness and necessity of the contract provisions is (1) the letter from Southland to Mr. Womack, which sets forth the reasons for the franchisor's requirement and (2) the complaint, wherein Mr. Womack sets forth the reasons why the requirements are a violation. Reasonableness and necessity are issues of fact and the pleadings alone do not provide an adequate basis for a factual determination. Therefore, we reverse and remand for a determination on the merits. A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.)
Corp v. Atlantic Richfield Co., Supreme Court of Washington, En Banc., October 21, 1993, 122 Wash.2d 574860 P.2d 1015 (“At issue is whether a franchise offer that includes significant changes to an existing franchise agreement constitutes termination or nonrenewal of the existing agreement under Washington's Franchise Investment Protection Act, (FIPA) RCW 19.100. FIPA was enacted in 1971 to deal with sales abuses and unfair practices in the franchising of goods and services. Morris v. Int'l Yogurt Co., 107 Wash.2d 314, 317, 729 P.2d 33 (1986); Rutter v. BX of Tri–Cities, Inc., 60 Wash.App. 743, 747, 806 P.2d 1266 (1991). FIPA is in two parts. The first regulates the offering and sale of franchises with detailed *580 requirements for registration of offers and disclosure of facts material to the transaction. Coast to Coast Stores, Inc. v. Gruschus, 100 Wash.2d 147, 150, 667 P.2d 619 (1983); Lobdell v. Sugar 'N Spice, Inc., 33 Wash.App. 881, 888, 658 P.2d 1267, review denied, 99 Wash.2d 1016 (1983). The second part of FIPA responds to the problems of the franchisor-franchisee relationship with a “fair practices” or “franchisee bill of rights” section. RCW 19.100.180; Coast, 100 Wash.2d at 150, 667 P.2d 619. The types of problems this “bill of rights” is intended to address have been described as follows: The franchisor normally occupies an overwhelmingly stronger bargaining position and drafts the franchise agreement so as to maximize his power to control the franchisee. Franchisors have used this power to terminate franchises arbitrarily, to coerce franchisees under threat of termination, and to force franchisees to purchase supplies from the franchisor or approved suppliers at unreasonable prices, to carry excessive inventories, to operate long, unprofitable hours, and to employ other unprofitable practices. Chisum, State Regulation of Franchising: The Washington Experience, 48 Wash.L.Rev. 291, 297–98 (1972–1973). It is RCW 19.100.180, the “bill of rights” intended to deal with such problems, that is of significance here. **1019 RCW 19.100.180 states initially that “[t]he parties shall deal with each other in good faith.” RCW 19.100.180(1). The statute then provides a long list of proscribed conduct. RCW 19.100.180(2) states that “it shall be an unfair or deceptive act or practice or an unfair method of competition and therefore unlawful and a violation of this chapter for any person to” perform the following 10 acts. One such act is to [r]efuse to renew a franchise without fairly compensating the franchisee for the fair market value, at the time of expiration of the franchise, of the franchisee's inventory, supplies, equipment, and furnishings purchased from the franchisor, and good will.... RCW 19.100.180(2)(i). Compensation for goodwill is not required if the franchisor provides 1 year's notice of nonrenewal and agrees not to enforce any covenant not to compete. While the statute as originally worded granted franchisees *581 a right of renewal, this language was eliminated before the statute went into effect. See Laws of 1972, 1st Ex.Sess., ch. 116, p. 273. Also prohibited under RCW 19.100.180 is termination of a franchise prior to the expiration of its term except for good cause. RCW 19.100.180(2)(j). Upon termination for good cause, “the franchisor shall purchase from the franchisee at a fair market value at the time of termination, the franchisee's inventory and supplies....” RCW 19.100.180(2)(j). The franchisees here argued successfully to the Court of Appeals that ARCO engaged in an act of overreaching proscribed by FIPA by offering them new am/pm and minimarket agreements with terms more onerous than their original minimarket agreements. Despite the fact that none of the franchisees ceased doing business with ARCO as a result of these offers, the franchisees contended that the offer of new and financially unreasonable terms constituted a termination or nonrenewal of the original minimarket leases for which compensation was required under FIPA. The franchisees also argued, through the Dawson affidavit, that ARCO breached several oral promises made regarding the original minimarket program when it offered the new agreements, and that this breach constituted a termination requiring statutory compensation. The Court of Appeals concluded that such changes and breaches could constitute nonrenewal or termination even though all of the franchisees herein accepted either the new minimarket agreement or the am/pm agreement. In so doing, the Court of Appeals rejected ARCO's contention that this court had found no cause of action for constructive termination under FIPA in Coast. At issue in Coast was whether a franchise was terminated when the franchisee's business was suspended by the franchisor's repossession of its inventory. When the franchisor in Coast determined that the franchisee was in default, it demanded possession of the collateral. The store was double-locked to protect the collateral, after which the franchisor received a temporary restraining order freezing any dealing *582 with the inventory, equipment, and accounts receivable in the store. The franchisee then sought compensation for all inventory, supplies, furnishings, and goodwill pursuant to FIPA. The trial court ordered the franchisor to purchase all inventory and supplies pursuant to RCW 19.100.180(2)(j) because the franchise agreement was terminated when the store was double-locked. Coast, at 149, 667 P.2d 619. This court reversed, holding that the trial court erred in equating cessation of the franchise business with termination of the franchise under RCW 19.100.180(2)(j). The court observed that under FIPA, the franchise is conceptually distinct from the franchisee's business. Coast, at 152, 667 P.2d 619. When Coast was decided, FIPA defined “franchise” as an oral or written contract or agreement, either expressed or implied, in which a person grants to another person, a license to use a trade name, service mark, trade mark, logotype or related characteristic in which there is a community interest in the business of offering, selling, distributing goods or services at wholesale or retail, leasing, or otherwise **1020 and in which the franchisee is required to pay, directly or indirectly, a franchise fee: ... [.] Former RCW 19.100.010(4). This definition applies here as well. This definition made it clear that the franchise was the agreement between the parties and not the business operated by the franchisee. Coast, at 152, 667 P.2d 619. Consequently, cessation of the franchisee's business operations would not necessarily constitute termination of the franchise. This court concluded from the “plain words” of FIPA that “a franchise is terminated only when the agreement between the franchisee and franchisor is brought to an end, terminating the franchisee's right to use the franchisor's trade name, service mark, or the like.” Coast, at 153, 667 P.2d 619.) Corp v. Atlantic Richfield Co., Supreme Court of Washington, En Banc., October 21, 1993, 122 Wash.2d 574860 P.2d 1015 (“The Court of Appeals in this case distinguished Coast on the basis that it did not address the question of the point at which the terms of a purported franchise renewal so depart from the original franchise terms that a constructive termination or nonrenewal has occurred. Corp, 67 Wash.App. at 528, 837 P.2d 1030. While this is true, we are persuaded that under Coast there was no termination of the franchises in this case. It is undisputed that all of the franchisees herein accepted ARCO's am/pm or new minimarket agreements and operated under ARCO's trade name without interruption. Moreover, one court has expressly held that Coast bars a cause of action for constructive termination under FIPA. See Carlock v. Pillsbury Co., 719 F.Supp. 791, 852 (D.Minn.1989). One of the issues in Carlock was whether a franchisor's misrepresentations and failed promises constituted wrongful termination under FIPA even though the franchisees continued to hold and exercise their rights to use the Haagen–Dazs trademark and to market Haagen–Dazs products. The court in Carlock cited Coast and concluded that the franchisees could not recover under RCW 19.100.180(2)(j) for wrongful termination because their franchises had not actually been terminated. “Constructive termination of a franchise is not actionable under Wash.Rev.Code Ann. § 19.100.180(2)(j).” Carlock, at 852. Thus, we interpret Carlock, as well as Coast, as supporting ARCO's contention that no termination occurred because the franchisees' right to use the ARCO name was never terminated. The Court of Appeals in this case did not cite Carlock or a federal district court decision discussing nonrenewal under FIPA. See Thompson v. ARCO, 663 F.Supp. 206 (W.D.Wash.1986). While the franchisees correctly argue that this court is not bound by federal court decisions, these opinions base holdings on FIPA and are helpful given the dearth of Washington law concerning franchise termination and nonrenewal. Included among the plaintiffs in Thompson were two of the franchisees in the present case. They and other am/pm franchisees sought to bar ARCO from imposing a $20,000 franchise renewal fee. The franchisees claimed that ARCO violated FIPA by failing to disclose the amount of a future franchise fee in its initial franchise offer. Thompson, at 207. The court found initially that this argument was based in *584 part on the incorrect assumption that FIPA creates an automatic right to renew a franchise. Next, the court turned to the contention that any conditions to be placed upon the franchisee at any renewal of the am/pm franchises had to be disclosed in the first offering circular. The court rejected this argument as well: It defies logic to argue that Atlantic Richfield must disclose to its “am/pm” franchisees at the initial offering the unknown contract terms that will govern some future franchise agreement.... ... [T]he competitive nature of the market place simply does not permit prudent businesses to fix for some indefinite period the prices of their products, especially in the retail oil and gasoline business. Thompson, at 209–10. The court concluded that failure to disclose in an initial franchise offering circular the amount of a future franchise fee did not violate any provision of FIPA. Thompson, at 210. Implicit in Thompson is the idea that renewal of a franchise agreement and new franchise terms are not mutually exclusive. The court made this conclusion explicit when it declined the franchisees' motion for reconsideration. See Thompson v. ARCO, Business Franchise Guide (CCH) § 9080 (W.D.Wash.1987). In seeking reconsideration, the franchisees argued for the first time that ARCO actually had refused to renew their franchises with its new requirement of a $20,000 renewal fee. The court disagreed. ARCO has not refused to renew the franchises, nor have they been terminated. Plaintiffs simply are dissatisfied with some of the terms offered in the new agreement. Those terms were offered by ARCO on a non-discriminatory basis to all franchisees. A dislike of the terms of the new agreement strong enough to prompt plaintiffs not to seek renewal simply is not the same as a refusal to renew or a termination by ARCO. Thompson, at 18,735. The court reasoned that since ARCO never granted its franchisees a right to renew, the conditions and terms of renewal were not relevant to the initial franchise offer. ARCO had fully advised the franchisees that they had no absolute *585 right of renewal and that if ARCO offered them a new franchise, they would have to comply with ARCO's then-existing policy regarding franchises. “This disclosure fully comports with both the letter and spirit of the FIPA....” Thompson § 9080, at 18,736. Thus, the inclusion of new terms in a subsequent franchise offer comports with FIPA and does not constitute nonrenewal or termination of the original franchise. Here, as in Thompson, ARCO granted no right to renew and told the minimarket dealers that subsequent agreements would contain the terms then being offered to other lessees. As in Thompson, the franchisees here were dissatisfied with some of the terms offered in the new am/pm and minimarket agreements. We agree with the Thompson court that a franchisee's dissatisfaction with new terms does not equal a refusal to renew or a termination by the franchisor. Corp v. Atlantic Richfield Co., Supreme Court of Washington, En Banc., October 21, 1993, 122 Wash.2d 574860 P.2d 1015 (“The franchisees base their arguments to this court almost entirely on the premise that FIPA is designed to protect franchisees from franchisors. While this is true, that design cannot override the language of FIPA's termination, nonrenewal, and compensation provisions. Under RCW 19.100.180(2)(i) and (j), compensation is triggered by nonrenewal or termination of the franchise by the franchisor. The compensation provisions do not apply where a franchisee chooses not to enter into a franchise because of a dislike of its terms. Nor is compensation due where, as here, the franchisees continue to operate the franchised business. As this court pointed out in Coast, the franchisor is required by RCW 19.100.180(2)(j) to purchase the inventory following termination to protect the franchisee *586 from being left without a franchise, but with a substantial investment in inventory which he or she cannot sell. Coast, 100 Wash.2d at 154, 667 P.2d 619. We agree with ARCO that RCW 19.100.180(2)(i) and (j) do not require a franchisor to compensate franchisees for the value of the inventories they continued to sell, for the value of the equipment and supplies they continued to use, and for the “goodwill” **1022 they continued to enjoy as they operated their convenience stores. The Fourth Circuit Court of Appeals reached a similar conclusion based on Maryland law in Central GMC, Inc. v. General Motors Corp., 946 F.2d 327 (4th Cir.1991), cert. denied, 503 U.S. 907, 112 S.Ct. 1265, 117 L.Ed.2d 493 (1992). When a dealer who sold light, medium, and heavy-duty trucks alleged that GMC's decision to discontinue making heavy-duty trucks constituted wrongful termination of his franchise, the circuit court disagreed. Under the language of the Maryland statute governing franchise terminations, the court found that GMC had discontinued a product, not terminated a franchise. Central GMC, at 332. The court declined the dealer's invitation to interpret the statute primarily in light of its overarching purpose of protecting vehicle dealers from the superior bargaining power possessed by vehicle manufacturers. The court found general purposes a less reliable guide to statutory interpretation than the specific language chosen by the legislature to implement those purposes, and also found that the general purpose of protecting dealers against abuses of superior bargaining power was not intended to insulate them from every adverse turn in a market economy. Central GMC, at 332. These findings apply here. As the court in Central GMC noted, franchise protection does not guarantee a franchisee a risk-free endeavor. Central GMC, at 334. A franchise relationship is a business rather than a fiduciary relationship. Rau, Implied Obligations in Franchising: Beyond Terminations, 47 Bus.Law. 1053, 1075 (1992). Even under legislation providing franchisees with express protection from significant changes in franchise agreements, courts generally give considerable deference to franchisors' efforts to restructure, retrench, or *587 wind down their franchise systems. See Rau, 47 Bus.Law. at 1075–78. One example of such legislation is the Wisconsin Fair Dealership Law. This law, which governs franchises and more traditional distribution arrangements, forbids a franchisor from terminating, canceling, failing to renew, or substantially changing the competitive circumstances of a dealership agreement without good cause. See ABA Antitrust Section: Monograph 17, Franchise Protection: Laws Against Termination and the Establishment of Additional Franchises ch. 2, at 17 (1990); Remus v. Amoco Oil Co., 794 F.2d 1238, 1240 (7th Cir.), cert. dismissed, 479 U.S. 925, 107 S.Ct. 333, 93 L.Ed.2d 345 (1986). The Seventh Circuit explained in Remus that the provision forbidding substantial change is intended to protect the dealer from constructive termination, which the court defined as the franchisor's making the dealer's competitive circumstances so desperate that the dealer “voluntarily” gives up the franchise.... The Wisconsin Fair Dealership Law makes the equation explicit. Not only may the franchisor not terminate or fail to renew the franchise outright; the franchisor may not drive the dealer out of business.... Remus, at 1240. The court concluded, however, that this equation does not insulate a franchisee from changes in its franchise agreement. Specifically, the court held that Amoco's forcing of a “discount for cash” program on its franchisees was not a constructive termination of the franchise agreement. Remus, at 1241. The provision in the Wisconsin law protecting franchisees from substantial change was not meant to prevent franchisors from instituting nondiscriminatory system-wide changes without the unanimous consent of the franchisees. Remus, at 1241. Other courts have similarly interpreted the Wisconsin act as allowing changes in franchise agreements based on economic necessity. See Ziegler Co. v. Rexnord, Inc., 147 Wis.2d 308, 318, 433 N.W.2d 8 (1988) (“contrary interpretation of the statute would place all risk of loss due to fundamental economic change on the grantor in perpetuity”); Bresler's 33 Flavors Franchising Corp. v. Wokosin, 591 F.Supp. 1533, 1538 (E.D.Wis.1984) ( “American businesses compete in a free market economy, and laws regulating trade **1023 must be interpreted in a manner consistent with free market economic principles”). Federal law also restrains a franchisor from instituting change to force a franchisee out of business. The petroleum marketing practices act (PMPA) allows a franchisor to refuse to renew a dealer for failing to agree to changes in the provisions of the franchise, provided that the changes are made in good faith and not to prevent renewal of the relationship. See 2 W. Garner, Franchise and Distribution Law and Practice § 15:10, at 21 (1990). Even with this express restraint, however, franchisors are given wide latitude to make changes in franchise agreements. Courts that have interpreted the good faith provision have held that there is no basis in the statute to examine the economic consequences of a proposed new franchise agreement upon the franchisee so long as the franchisor does not have a discriminatory motive and does not use the change in provisions to avoid renewal. Thus, even though new rent provisions in a franchise agreement may make a franchise unprofitable to the dealer, unprofitability is not a measure of good faith.... ... Moreover, the fact that a franchisor presents an agreement to its franchisees on a “take it or leave it” basis does not show a lack of good faith. W. Garner, Franchise and Distribution Law and Practice, at 22 (1980). These observations are supported by the Ninth Circuit's holding in Svela v. Union Oil Co., 807 F.2d 1494 (9th Cir.1987). When a franchisee complained that conversion of his full-service lease to a fast-service lease constituted a refusal to renew under the PMPA, the Ninth Circuit disagreed. Svela, at 1500. Under the PMPA, “renewal of the franchise relationship can be based on terms and conditions substantially different from those of the original franchise”. Svela, at 1500. Thus, even under statutory provisions protecting franchisees from changes intended to drive them out of business, courts have held that significant changes in franchise provisions *589 do not constitute termination or nonrenewal of the franchise. In addition, FIPA contains no explicit prohibition against a franchisor making substantial change without good cause and it is difficult to read the act's nonrenewal and termination provisions as providing an implied prohibition. Furthermore, as stated earlier, ARCO's minimarket leases informed franchisees that they had no right to renew and that subsequent agreements might embody substantial changes. Thus, neither FIPA nor the franchisees' original agreements expressly insulated the franchisees from new terms resulting from economic changes in the minimarket business. Finally, we agree with ARCO that the Dawson affidavit is irrelevant to a resolution of this issue. As stated earlier, Dawson alleged that he was told before entering the original minimarket lease that ARCO would support the minimarkets and make them a national chain and would never raise royalties above 10 percent. Under the original minimarket leases, ARCO reserved the right to change the terms of the agreement upon its expiration, and FIPA does not equate such change with termination or nonrenewal by the franchisor. While FIPA is intended to protect franchisees from franchisor overreaching, we conclude that this intent does not include compensating franchisees under RCW 19.100.180(2)(i), (j) when they continue operating as franchisees under new agreements. We conclude that summary judgment was appropriate since, as a matter of law, ARCO did not terminate or fail to renew the franchisees' original minimarket agreements by offering them new minimarket and am/pm franchise agreements. Accordingly, we reverse the Court of Appeals and affirm the trial court's order of summary judgment in favor of ARCO.”)
Nelson v. National Fund Raising Consultants, Inc., Supreme Court of Washington, En Banc., December 17, 1992, 120 Wash.2d 382, 842 P.2d 473 (“I. Franchise Act Violation -- Both the trial court and Court of Appeals concluded that DeShazer violated RCW 19.100.180(2)(d)1. That section reads in part: For the purposes of this chapter and without limiting its general application, it shall be an unfair or deceptive act or practice or an unfair method of competition and therefore unlawful and a violation of this chapter for any person to: .... (d) Sell, rent, or offer to sell to a franchisee any product or service for more than a fair and reasonable price. (Italics ours.) DeShazer's principal argument is the markup he imposed on the goods the Nelsons purchased did not violate this provision because the markup was actually a “franchise fee” or royalty. He claims it was thus not an unfair or unreasonable price imposed on goods and services. Stated differently, DeShazer urges us to think of the “price” of goods as comprising two discrete components: the actual food price and the markup or franchise royalty. DeShazer supports his position by emphasizing two provisions of the Franchise Act. First, he argues the definition of “franchise fee” in the Act is so broad as to include markups on goods and services. That position is unpersuasive *388 for two reasons. First, the Act excepts from its definition of permissible franchise fees any “purchase or agreement to purchase goods at a bona fide wholesale price”. That exception applies precisely to the type **476 of agreement at issue here. DeShazer can avoid the exception only by a highly strained reading of the provision, whereby an agreement, by virtue of charging more than the wholesale price, ceases to be an agreement to purchase “wholesale” goods. We find no support for the argument the Legislature intended to indulge such reasoning. Second, to read the definition of franchise fee to encompass surcharges on wholesale prices would permit franchisors to circumvent the provision of the Act prohibiting the imposition of charges above a fair and reasonable price. Indeed, if DeShazer's argument were to prevail, any price—even an unfair or unreasonable one—could be rendered proper by characterizing it as a franchise fee or royalty arrangement. The second provision on which DeShazer relies is RCW 19.100.180(2)(e). That provision states that it is an unfair practice for a franchisor to “[o]btain money, goods, services, *389 anything of value, or any other benefit from any other person with whom the franchisee does business on account of such business unless such benefit is disclosed to the franchisee.” (Italics ours.) DeShazer argues that, because a franchisor may receive a benefit from suppliers if it is disclosed, his markup is permissible under the Act because he disclosed it to the Nelsons. One commentator, Professor Donald Chisum, has noted the apparent conflict between this section and the fair and reasonable price provision. See Chisum, State Regulation of Franchising: The Washington Experience, 48 Wash.L.Rev. 291, 372–73 (1973). As Chisum observes, if the franchisor may control the source of supply for a franchisee, the franchisor may require the franchisee to purchase supplies through the franchisor or from approved sources. If the franchisor sells the goods, it can charge only a reasonable price under RCW 19.100.180(2)(d). On the other hand, if the franchisee is forced to buy from approved sources, the supplier may charge an unreasonably higher price and split the profits with the franchisor as long as the arrangement is disclosed under RCW 19.100.180(2)(e). Chisum concludes that the two sections should ideally follow consistently either the disclosure theory or the prohibitory theory. Chisum, 48 Wash.L.Rev. at 373. We follow the prohibitory theory in this case because it better comports with the general purpose of the Act, to protect franchisees, and because to do otherwise would vitiate the provision of the act forbidding franchisors from imposing unfair or unreasonable prices on the costs of goods and services. See RCW 19.100.180(2)(d). Although there is some technical merit to DeShazer's contention that it is anomalous to invalidate the markup when he could have generated the same profit using some other method of charging, we cannot agree with his arguments for three reasons. First, DeShazer's argument about the timing of the Nelsons' knowledge is not clearly supported by the record. DeShazer relies on the trial court's Finding of Fact 63 that the Nelsons knew all the material terms of the operation before *390 becoming area directors. Findings of Fact, Conclusions of Law, Clerk's Papers, at 207. However nothing in the Total Requirements Agreement, dated October 1, 1985, indicated that the price of the goods would include a markup. The Nelsons appear to have learned the precise percentage the markup represented, when they received their first bill. The court's Finding of Fact 24 states: Under the terms of the Total Requirements Agreement, the plaintiffs were required to purchase all product [sic] and equipment from NFRCI. There is no statement in the contract of the price for said purchases. In practice, NFRCI required that the Nelsons and other area directors order their pizza ingredients and supplies from a local distributor which made direct deliveries to the area director. The distributor, however, would bill NFRCI and/or DeShazer for the product. NFRCI and DeShazer would then mark up or “boost” the wholesale price of the product by twenty percent (20%) and require that the area director pay this higher amount. Clerk's Papers, at 195. Moreover, the trial record contains the undisputed testimony of Scott Nelson that he was able to ascertain the percentage the markup represented only upon receipt of his first bill. See Report of Proceedings, at 465.4 See also, trial court's comment suggesting the Nelsons did not know the markup was 20 percent at the time they signed the contract. Report of Proceedings, at 570. The trial court's Finding of Fact 63, viewed against this record, persuades *391 us the trial court meant by its finding only that the Nelsons understood the material facts about the operation of the business, not that they were aware there would be a 20 percent markup on the goods they purchased before becoming directors. Findings of Fact, Conclusions of Law, Clerk's Papers, at 207. Disclosure of a contract's terms, to be meaningful, must occur before contract formation, not after the parties have become contractually bound. See generally Restatement (Second) of Contracts, vol. 1, ch. 3 (1981). Because disclosure, at least as to the precise content of the markup, occurred only after the contract was formed, DeShazer cannot rely on disclosure to insulate himself from the charge of violating the Act. Second, the argument that the same profit could have been generated some other way is not persuasive. One of the purposes of the statute is precisely to structure agreements between franchisor and franchisee so as to maximize disclosure and thus minimize franchisor overreaching. See Chisum, 48 Wash.L.Rev. at 358–59 (“One of the primary purposes of the Franchise Act is to curb franchise sales abuses by requiring full and accurate disclosure of material information to the prospective franchisee.” See also, Morris v. International Yogurt Co., 107 Wash.2d 314, 317, 729 P.2d 33 (1986)). The Washington State Court of Appeals has explained: Franchising has disadvantages for franchisees ... who suffer a lack of material information before purchasing their franchise and of bargaining power after purchasing. Chisum, at 297. See generally C. Rosenfield, Franchising, ch. 1 (1970) (history of franchising and its regulation). The State Legislature enacted FIPA in 1972 in order to correct this maldistribution of information and power. Chisum. Lobdell v. Sugar 'N Spice, Inc., 33 Wash.App. 881, 888, 658 P.2d 1267 (1983), rev. denied, 99 Wash.2d 1016 (1983). Third, DeShazer's interpretations of RCW 19.100.010(11) and 19.100.180(2)(d) are unavailing because they construe these provisions in a way that renders them incompatible with the other provisions of the Act, and with *392 the Act's fundamental purpose. Thus, reading the definition of “franchise fee” in former RCW 19.100.010(11) expansively would render meaningless the Legislature's express exception from its definition agreements to purchase goods at a bonafide wholesale price. Likewise, construing the disclosure provisions broadly would effectively nullify the prohibition in RCW 19.100.180(2)(d) against charging more than a fair and reasonable price for goods and services. Statutory provisions are construed in light of one another and in view of the statute's overall purpose. See, e.g., Prince v. Savage, 29 Wash.App. 201, 627 P.2d 996 (1981), rev. denied, 96 Wash.2d 1002 (1981). For the reasons set forth above, we affirm the trial court's conclusion that DeShazer violated the Franchise Act.”)