What part of the Alloy Franchise Agreement is unenforceable in Illinois regarding franchisee rights?
Alloy Franchise · 2025 FDDAnswer from 2025 FDD Document
Subject to Section 12.A, 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 Franchise 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 15.H (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.
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- Section 41 of the Illinois Franchise Disclosure Act provides that any condition, stipulation, or provision purporting to bind any person acquiring any franchise to waive compliance with any provision of the Illinois Franchise Disclosure Act or any other law of the State of Illinois is void. This Section shall not prevent any person from entering into a settlement agreement or executing a general release regarding a potential or actual lawsuit filed under any of the provisions of the Illinois Franchise Disclosure Act, nor shall it prevent the arbitration of any claim pursuant to the provisions of Title 9 of the United States Code.
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- No disclaimer, questionnaire, clause, or statement signed by a franchisee in connection with the commencement of the franchise relationship shall be construed or interpreted
Source: Item 23 — RECEIPTS (FDD pages 69–245)
What This Means (2025 FDD)
According to Alloy's 2025 Franchise Disclosure Document, the Acknowledgment Addendum attached to the Franchise Agreement is unenforceable in Illinois. This addendum, which is specifically marked as 'not for use in the State of Illinois,' could potentially force a franchisee to waive or release rights granted under the Illinois Franchise Disclosure Act, 815 IL § 705.
This protection ensures that Alloy franchisees in Illinois cannot be compelled to unknowingly surrender their legal rights under Illinois franchise law. The Illinois Franchise Disclosure Act aims to protect franchisees from unfair practices and information asymmetry, so any attempt to bypass these protections through waivers is prohibited.
Additionally, Section 41 of the Illinois Franchise Disclosure Act reinforces this protection by stating that any provision requiring a franchisee to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. However, this does not prevent franchisees from entering into settlement agreements or arbitrating claims under the Federal Arbitration Act. This ensures franchisees retain their rights while allowing for dispute resolution through settlement or arbitration.
Furthermore, no statement signed by a franchisee can be interpreted as waiving claims of fraud or disclaiming reliance on information provided by Alloy during the franchise commencement. This provision overrides any conflicting terms in the franchise agreement, ensuring that franchisees can pursue claims of fraud based on misrepresentations made by the franchisor.