Munson, J. Shields, A.c.j., and Thompson, J., concur.
David Rutter appeals a summary judgment in favor of Business Exchange, Inc., contending Washington's Franchise Investment Protection Act should govern termination of a franchise agreement between Business Exchange, Inc., and BX of Tri-Cities, Inc., despite a choice of law clause in the agreement.
Business Exchange, Inc. (BEI), a California corporation, operates a nationwide barter club for businesses through a number of local franchises called Business Exchanges (BX). Under this franchise arrangement, BEI grants exclusive licenses to qualified franchisees to conduct the business exchange program in designated geographic areas.
Thomas Brown is the sole officer and shareholder of B-X of Spokane, Inc. (BXSPO). Beginning in January 1981, BXSPO operated the business exchange program in Spokane County. Mr. Brown enrolled David Rutter, doing business as Burger King, as a BX member on January 30, 1981.
In October 1982, Mr. Brown incorporated BX of Tri-Cities, Inc. (BXTC). BXTC immediately purchased the BEI franchise for the Walla Walla and Tri-Cities areas from Mountain West Distributors, Inc., thereby acquiring exclusive rights to operate the BX program in Benton, Columbia, Franklin, and Walla Walla Counties.
In July 1983, Mr. Rutter entered into a loan arrangement with Mr. Brown in which he signed over $16,500 worth of his BX credits in exchange for a promissory note for $15,000, secured by 51 percent of the stock in BXTC. Mr. Brown signed the promissory note in his capacity as president of BXTC.
On February 1, 1984, BEI sent a notice of default to BXSPO, addressed to Mr. Brown. On March 26, 1984, BEI sent another letter to BXSPO, again addressed to Mr. Brown, canceling all agreements between him and BEI, including the BXTC franchise.*fn1
BXTC failed to make monthly installment payments required on the $15,000 promissory note. On April 23, 1984, Mr. Rutter sent BXTC notice of default. Aware that BEI had terminated the BXTC franchise, Mr. Rutter commenced this lawsuit, naming BXSPO, BXTC, the marital community of Thomas and Vicki Brown, and BEI as defendants.
In 1987 an order was entered permitting Mr. Rutter to pursue BXTC's claims against BEI under the trust fund doctrine.*fn2 That order has not been appealed.
Contending the BEI franchise agreement is subject to the provisions of the Washington Franchise Investment Protection Act (FIPA), and the cancellation of the BXTC franchise violated that act, Mr. Rutter moved for partial summary judgment against BEI.*fn3 BEI also moved for partial summary judgment, claiming more liberal provisions of
California law governed the validity of the franchise ...