Was the Assurance of Voluntary Compliance (AVC) entered into by 360 Painting an admission of guilt?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
linois Attorney General's Office. In January 2020, the Illinois Attorney General's Office began an investigation of potential violations of the Illinois Franchise Disclosure Act by 360 Painting regarding its failure to obtain a signed Illinois amendment to the franchise agreement for Illinois franchises between April 2017 and December 2019. 360 Painting did not contest that Illinois amendments were not executed by Illinois franchisees during this period, but asserted that: (a) each Illinois franchisee received a properly registered franchise disclosure document, including an addendum to the disclosures and an amendment to the franchise agreement containing modifications required by Illinois law; and (b) because each franchisee received the required disclosures, the failure to obtain executed amendments from each franchisee could not have affected the franchisees' decision to purchase the franchise. The Illinois Attorney General asserted that because 360 Painting brought suit against an Illinois franchisee in Virginia (before unilaterally dismissing the case by filing a Motion to Non-Suit), Illinois franchisees were harmed. On May 22, 2020, 360 Painting entered into an Assurance of Voluntary Compliance ("AVC"), under which 360 Painting agreed to offer affected franchisees the opportunity to rescind their franchise agreements, make a $6,000 payment to the state, disclose the AVC in its disclosure document, and comply with the Illinois Franc
Source: Item 3 — LITIGATION (FDD pages 13–18)
What This Means (2025 FDD)
According to the 2025 FDD, the Assurance of Voluntary Compliance (AVC) that 360 Painting entered into with the Illinois Attorney General's Office in May 2020 did not constitute an admission of guilt. The investigation by the Illinois Attorney General's Office concerned potential violations of the Illinois Franchise Disclosure Act regarding the failure to obtain signed Illinois amendments to the franchise agreement for Illinois franchises between April 2017 and December 2019. While 360 Painting acknowledged that the Illinois amendments were not executed, they maintained that each franchisee received the required disclosures.
To resolve the matter, 360 Painting entered into an AVC, agreeing to offer affected franchisees the opportunity to rescind their franchise agreements, make a $6,000 payment to the state, disclose the AVC in its disclosure document, and comply with the Illinois Franchise Disclosure Act in the future. This resolution was a compromise to address the concerns raised by the Illinois Attorney General's Office without 360 Painting formally admitting any wrongdoing.
It is important for a prospective franchisee to understand the details of any past legal or administrative actions involving the franchisor. While the AVC itself is not an admission of guilt, the underlying issues that led to the agreement should be carefully considered. This includes understanding the nature of the alleged violations, the terms of the resolution, and any potential impact on current or future franchisees. Reviewing Item 3 of the FDD, which covers litigation, is essential for assessing these risks.