factual

Can the All County franchise agreement require arbitration or litigation to be conducted outside of the franchisee's state?

All_County Franchise · 2025 FDD

Answer from 2025 FDD Document

  • (f) A provision requiring that arbitration or litigation be conducted outside this state. This shall not preclude the franchisee from entering into an agreement, at the time of arbitration, to conduct arbitration at a location outside this state.

ADDENDUM TO ALL COUNTY® FRANCHISE DISCLOSURE DOCUMENT FOR THE STATE OF ILLINOIS

Illinois law governs the Agreements.

In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.

    1. The Franchise Agreement requires the application of the laws of Florida. This provision may not be enforceable under California law.
    1. The Franchise Agreement requires binding arbitration. The arbitration will occur in the office of the American Arbitration Association that is nearest to our principal business address with the costs being borne as determined by the arbitrator. Prospective franchisees are encouraged to consult private legal counsel to determine the applicability of California and federal laws (such as Business and Professions Code Section 20040.5, Code of Civil Procedure Section 1281, and the Federal Arbitration Act) to any provisions of a franchise agreement restricting venue to a forum outside the State of California.

Source: Item 22 — Contracts (FDD page 43)

What This Means (2025 FDD)

According to the 2025 All County Franchise Disclosure Document, the franchise agreement's stipulations regarding the location of arbitration or litigation proceedings can vary depending on the state in which the franchisee operates. In general, a provision requiring arbitration or litigation to be conducted outside of the franchisee's state may not be permissible. However, this does not prevent a franchisee from agreeing to conduct arbitration at a location outside their state at the time of arbitration. This suggests that while All County cannot mandate out-of-state arbitration or litigation in the initial agreement, a franchisee can voluntarily agree to it later.

For franchisees in Illinois, the FDD states that any provision in the franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, the franchise agreement may still provide for arbitration to take place outside of Illinois. This means that All County franchisees in Illinois may be required to participate in arbitration outside of Illinois, but they cannot be forced to litigate outside of Illinois.

For franchisees in California, the FDD states that the Franchise Agreement requires binding arbitration, which will occur in the office of the American Arbitration Association nearest to All County's principal business address, with costs borne as determined by the arbitrator. The FDD encourages prospective franchisees to consult legal counsel to determine the applicability of California and federal laws to any provisions of a franchise agreement restricting venue to a forum outside the State of California. Additionally, the Franchise Agreement requires the application of the laws of Florida, which may not be enforceable under California law. Therefore, California franchisees should seek legal counsel to understand their rights regarding venue, arbitration, and choice of law.

Disclaimer: This information is extracted from the 2025 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.