Can arbitration related to an Aplus franchise in Illinois take place outside of Illinois?
Aplus Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 22: CONTRACTS]
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- The Illinois Attorney General's Office requires that certain provisions contained in franchise documents be amended to be consistent with Illinois law, including the Franchise Disclosure Act of 1987, 815 ILCS 705/1-44, (collectively, the "Act"). To the extent that this Franchise Agreement contains provisions that are inconsistent with the following, such provisions are hereby amended:
- a. Section 41 of the Act provides that any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
- b. In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, arbitration may take place outside of Illinois.
- c. Illinois law shall apply to and govern the Franchise Agreement.
- d. Your rights upon termination and non-renewal of the Franchise Agreement are set forth in Sections 19 and 20 of the Act.
Source: Item 22 — CONTRACTS (FDD page 68)
What This Means (2024 FDD)
According to Aplus's 2024 Franchise Disclosure Document, arbitration related to a franchise agreement in Illinois may take place outside of Illinois. Both the state-specific addendum and the general contract terms address this point. While Illinois law voids any provision that designates jurisdiction and venue outside of Illinois for legal actions, an exception is made for arbitration.
This means that if a dispute arises between Aplus and a franchisee in Illinois that leads to arbitration, the arbitration proceedings can be held in a location outside of Illinois. This could potentially increase costs for the franchisee, who may have to travel and incur expenses to participate in arbitration hearings. It is important for prospective franchisees to understand this clause and consider the potential implications of having to arbitrate a dispute in a distant location.
The FDD also states that Illinois law governs the Franchise Agreement, but this does not override the allowance for out-of-state arbitration. Prospective Aplus franchisees in Illinois should carefully review the franchise agreement and any state-specific addenda with legal counsel to fully understand their rights and obligations, particularly regarding dispute resolution processes and venue.