What is the applicable law for the Alloy Franchise Agreement?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
-
- California Business & Professions Code Sections 20000 through 20043 provide rights to you concerning termination, transfer or nonrenewal of a franchise. If the franchise agreement contains a provision that is inconsistent with the law, the law will control.
-
- The Acknowledgment Addendum attached to the Area Development Agreement (and specifically stating that it is not for use in the State of Illinois) is unenforceable under Illinois law because it may have the effect of forcing a franchisee to waive or release certain rights that you as a franchisee have under the Illinois Franchise Disclosure Act, 815 IL § 705.
-
- Section 10.G (1) is deleted in its entirety and replaced with the following:
Applicable Law and Waiver. Subject to our rights under federal trademark laws and the parties' rights under the Federal Arbitration Act in accordance with Section 15.01 of this Agreement, the parties' rights under this Agreement, and the relationship between the parties is governed by, and will be interpreted in accordance with, the laws (statutory and otherwise) of Illinois.
- The following language is hereby added to the end of the FDD, Agreement and Area Development Agreement (if applicable): "No statement, questionnaire, or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise."
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to the 2025 Alloy Franchise Disclosure Document, the applicable law for the franchise agreement depends on the state where the franchise is located. For franchisees in Illinois, the Illinois Addendum to the Area Development Agreement states that the agreement is governed by Illinois law, subject to federal trademark laws and the Federal Arbitration Act. Specifically, the parties' rights under the agreement and the relationship between the parties will be interpreted in accordance with the laws of Illinois.
For franchisees in California, the FDD states that California Business & Professions Code Sections 20000 through 20043 provide rights concerning termination, transfer, or nonrenewal of a franchise. If any provision in the franchise agreement is inconsistent with California law, the law will take precedence. The California addendum also specifies that no statement signed by a franchisee can waive claims under state franchise law or disclaim reliance on statements made by the franchisor.
For states other than Illinois and California, the FDD does not explicitly state which jurisdiction's laws govern the franchise agreement. Prospective franchisees should carefully review the franchise agreement and any state-specific addenda to understand which laws will govern their agreement. It is advisable to seek legal counsel to clarify the applicable law and its implications for their specific situation.