Does the Belocal Franchise Agreement allow for arbitration to take place outside of Illinois?

According to Belocal's 2025 Franchise Disclosure Document, the Franchise Agreement is governed by Illinois law. Specifically, the FDD states that any provision designating jurisdiction and venue outside of Illinois is void, as per the Illinois Franchise Disclosure Act. However, the document explicitly notes an exception: a Belocal Franchise Agreement can stipulate that arbitration may occur outside of Illinois, despite the general restriction on jurisdiction and venue. This means that while lawsuits may need to be filed in Illinois, arbitration—a form of dispute resolution outside of court—can potentially take place in another state, depending on what the Franchise Agreement specifies.

For a prospective Belocal franchisee, this is an important distinction. While the laws of Illinois will govern the agreement, the location of arbitration could be elsewhere. This could mean increased travel costs and logistical challenges if arbitration is held far from the franchisee's location. It is crucial for franchisees to carefully review the Franchise Agreement to understand where arbitration would be held and to consider the potential implications of that location.

This flexibility regarding the location of arbitration is not uncommon in franchising, as it allows the franchisor some leeway in choosing a convenient or neutral location. However, franchisees should be aware of this provision and factor it into their decision-making process. They may also want to negotiate the arbitration location during the franchise agreement negotiation phase to ensure it is reasonable and does not unduly burden them.