Where must any legal action pertaining to the interpretation or enforcement of the Alloy franchise agreement be filed?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
OR THE STATE OF ILLINOIS**
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.
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to the 2025 Alloy Franchise Disclosure Document, the location for legal action depends on the franchisee's location. For franchisees in Illinois, any legal action related to the franchise agreement must be brought in the Illinois federal or state court for the Designated Area in which the franchisee is located, subject to Section 10.N of the agreement. However, the franchise agreement may provide for arbitration to take place outside of Illinois. For franchisees outside of Illinois, the FDD does not specify where legal action must be filed.
This means that if an Alloy franchisee is based in Illinois and has a dispute with Alloy, they will likely need to pursue legal action in Illinois, which could be more convenient and cost-effective for the franchisee. However, this is subject to Section 10.N of the agreement, which is not detailed in the provided excerpts. The Illinois addendum also states that Illinois law governs the Franchise Agreement.
For prospective Alloy franchisees located outside of Illinois, it's important to note that the FDD excerpts do not provide specific information on where legal action must be filed. This could mean that the location is specified in the main body of the franchise agreement, or it could be subject to negotiation. It is important to note that for franchisees in Minnesota, Section 16.I is modified to reflect that Minn. Stat. Sec. 80C.21 and Minn. Rule 2860.4400J prohibit Alloy from requiring litigation to be conducted outside of Minnesota. To the extent the Franchise Agreement requires litigation to be conducted outside of Minnesota, such provision is void.
Therefore, prospective franchisees should carefully review the franchise agreement and any state-specific addenda to understand the specific requirements for legal action. They should also consult with an attorney to understand their rights and obligations under the franchise agreement and applicable state laws. Franchisees should also inquire about Section 10.N to fully understand where they may be required to file a claim.