Besides the amendments in the Illinois addendum, how will the Alloy Area Development Agreement be construed and enforced?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
This Addendum pertains to franchises sold in the State of Illinois and is for the purpose of complying with Illinois statutes and regulations. Notwithstanding anything which may be contained in the body of the Area Development Agreement to the contrary, the Agreement is amended as follows:
- The following sentence is hereby added to the end of Section 3.A, Development Fee:
Due to the financial condition of the Franchisor, the Illinois Attorney General's Office has required a financial assurance. Therefore, we have posted a surety bond which is on file with the Illinois Attorney General's Office. A copy of the surety bond is attached as an exhibit to the Illinois addenda pages.
- The first sentence of Section 10.H is deleted in its entirety, and the following is substituted:
Subject to Section 10.N, any cause of action, claim, suit or demand allegedly arising from or related to the terms of this Agreement or the relationship of the parties must be brought in the Illinois federal or state court for the Designated Area in which you are located.
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- 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.
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- 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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the Area Development Agreement will be construed and enforced according to its terms, except as amended by the Illinois addendum. This means that all provisions of the agreement, unless specifically changed by the addendum, remain in full force and effect.
For a prospective Alloy area developer in Illinois, this implies that they must carefully review both the Area Development Agreement and the Illinois addendum to understand their rights and obligations. The addendum modifies certain sections of the agreement to comply with Illinois law, such as those related to jurisdiction, venue, and waivers of rights under the Illinois Franchise Disclosure Act. Therefore, the original agreement is still relevant, but it must be read in conjunction with the addendum to ensure compliance with Illinois regulations.
Specifically, the Illinois addendum addresses issues such as the financial assurance required by the Illinois Attorney General's Office due to Alloy's financial condition, the venue for legal actions, and the enforceability of acknowledgments that might force a franchisee to waive certain rights. It also stipulates that Illinois law governs the agreement. Understanding these modifications is crucial for an Alloy area developer to operate within the legal framework of Illinois.