Can the Alloy franchise agreement provide for arbitration to take place outside of Illinois?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Illinois law governs the Franchise Agreement.
In conformance with Section 4 of the Illinois Franchise Disclosure Act, 815 ILCS 705/1-44 (West 2016), 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 to take place outside of Illinois.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the franchise agreement may stipulate that arbitration can occur outside of Illinois, even though Illinois law governs the agreement. This is an exception to the general rule that any provision designating jurisdiction or venue outside of Illinois is void.
For a prospective Alloy franchisee in Illinois, this means that if a dispute arises that leads to arbitration, the arbitration proceedings might be required to take place in a location outside of Illinois. This could increase costs for the franchisee, who may have to travel and potentially hire legal representation in the location where the arbitration is held.
It is important for Illinois franchisees to understand this clause and consider the potential implications of arbitrating outside of the state. Franchisees should seek legal counsel to fully understand their rights and obligations under the franchise agreement, especially concerning dispute resolution and arbitration.