Does the Illinois Franchise Disclosure Act require amendments to the 360 Painting Franchise Agreement?
360_Painting Franchise · 2025 FDDAnswer from 2025 FDD Document
The Illinois Franchise Disclosure Act requires that certain provisions contained in franchise documents, including the Franchise Agreement, be amended to be consistent with Illinois law. Therefore, to the extent that the Franchise Agreement contains provisions that are inconsistent with the following, the modification set forth below shall be controlling:
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- Illinois law governs the agreements between the parties to this franchise.
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- Section 4 of the Illinois Franchise Disclosure Act provides that any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration outside of Illinois.
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- Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
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- Your rights upon termination and non-renewal of a franchise agreement are set forth in Sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- THE FRANCHISOR MAY SUBCONTRACT PAINTING, DECORATING AND WALL FINISHING SERVICES WITHIN YOUR "PROTECTED" TERRITORY TO OTHER (INCLUDING TO OTHER FRANCHISEES) WITH NO COMPENSATION TO YOU.
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- Sections 4.1 and 4.7 of the Franchise Agreement are modified to reflect that Franchisor must defer the payment of all initial fees payable to Franchisor until Franchisor has fulfilled all of its material preopening obligations to Franchisee and Franchisee has commenced doing business pursuant to the Franchise Agreement. The Illinois Attorney General's Office imposed this deferral requirement due to Franchisor's financial condition. Accordingly, notwithstanding anything to the contrary contained in the Franchise Agreement, Franchisee must pay Franchisor the Franchise Fee and initial technology fee payable to Franchisor at the time Franchisor has fulfilled all of its material pre-opening obligations to Franchisee and Franchisee has commenced doing business pursuant to the Franchise Agreement.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 42–46)
What This Means (2025 FDD)
According to the 2025 360 Painting Franchise Disclosure Document, the Illinois Franchise Disclosure Act does require amendments to the standard franchise agreement for franchisees in Illinois. The FDD states that certain provisions within the franchise documents must be amended to align with Illinois law. These amendments are controlling in the event of any inconsistencies.
Specifically, Illinois law governs the agreements, and any clause designating jurisdiction or venue outside of Illinois is void, although arbitration outside the state is permitted. Furthermore, franchisees cannot be bound to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law. The FDD also clarifies that a franchisee's rights upon termination and non-renewal are protected by Sections 19 and 20 of the Illinois Franchise Disclosure Act.
Notably, the 360 Painting agreement allows the franchisor to subcontract painting services within a franchisee's protected territory without compensating the franchisee. Additionally, due to 360 Painting's financial condition, the Illinois Attorney General's Office requires that the franchisor defer the payment of initial fees until all pre-opening obligations are met and the franchisee has commenced business. This deferral applies to the franchise fee and initial technology fee, notwithstanding any conflicting terms in the standard franchise agreement.