Is a clause designating jurisdiction or venue outside of Illinois enforceable in an Alloy franchise agreement?

According to Alloy's 2025 Franchise Disclosure Document, if you are an Alloy franchisee subject to Illinois statutes and regulations, any provision in the franchise agreement that designates jurisdiction or venue outside the State of Illinois is considered void. This is in direct conformance with Section 4 of the Illinois Franchise Disclosure Act, 815 ILCS 705/1-44 (West 2016). This means that if a dispute arises that leads to legal action, the case must be heard within Illinois, protecting the franchisee's access to local courts and legal resources.

However, the FDD clarifies an exception to this rule: the Alloy franchise agreement may still include a provision that allows for arbitration to occur outside of Illinois. Arbitration is a form of alternative dispute resolution where a neutral third party hears the arguments and makes a decision. While the location of a lawsuit is restricted to Illinois, Alloy retains the flexibility to conduct arbitration proceedings elsewhere.

This distinction is important for prospective Alloy franchisees in Illinois. While they are protected from having to litigate disputes in a distant jurisdiction, they should be aware that arbitration, which can be a quicker and sometimes less expensive method of dispute resolution, might still take place outside of the state. Franchisees should carefully consider the implications of this arbitration clause, including potential travel costs and the convenience of the location, before signing the franchise agreement.