Since early 2018, the Washington Attorney General’s Office has been carrying out a campaign to remove antipoaching provisions from franchise agreements nationwide, reaching agreements with 93 franchisors to remove such provisions. When Jersey Mike’s was served with a Civil Investigative Demand from the Attorney General, Jersey Mike’s responded that it did not enforce the provisions and had removed the provision from its standard form franchise agreements. The primary obstacle to resolution between Jersey Mike’s and the Attorney General, however, was the latter’s insistence that the provisions be removed from existing franchise agreements nationwide, a demand Jersey Mike’s suggested ought to be limited to Washington franchisees. When the two sides could not reach agreement, Washington brought suit against Jersey Mike’s and 22 of its Washington-based franchisees. Washington v. Jersey Mike’s Franchise Sys., No. 18-2-25822-7 SEA (Wash. Super. Ct. 2018).
Jersey Mike’s moved to dismiss the case, which was denied in a single-page order entered January 25, 2019. The parties engaged in discovery over the next several months, while Jersey Mike’s began the process of amending its 1,400 existing franchise agreements nationwide to remove the antipoaching provision — obtaining consent to amend all but one agreement. With a November trial date looming, the parties reached a settlement that included the standard commitments not to enforce the antipoaching provision in the single agreement that still contained it and not to include antipoaching provisions in future franchise agreements. Jersey Mike’s also agreed to pay $150,000 to the Attorney General for costs and attorneys’ fees.