Can a Belocal Franchise Agreement provide for arbitration to take place outside of Illinois?

According to Belocal's 2025 Franchise Disclosure Document, a Franchise Agreement may stipulate that arbitration occur outside of Illinois, despite Illinois law governing the agreement. This is explicitly allowed even though any provision designating jurisdiction and venue outside of Illinois is generally void, as per section 4 of the Illinois Franchise Disclosure Act. This exception for arbitration provides Belocal with the flexibility to choose a more convenient or neutral location for resolving disputes through arbitration.

For a prospective Belocal franchisee in Illinois, this means that while they are protected from having to litigate disputes in a non-Illinois venue, they could be required to participate in arbitration outside of the state. Arbitration clauses are common in franchise agreements as they offer a potentially faster and less expensive alternative to traditional litigation. However, franchisees should carefully consider the implications of arbitrating out-of-state, including potential travel costs and unfamiliarity with local arbitration practices.

It is important for Illinois franchisees to understand that while the Franchise Agreement is governed by Illinois law, the location of arbitration can be outside the state. This does not waive any rights under the Illinois Franchise Disclosure Act, but it does mean that the arbitration proceedings will take place elsewhere. Franchisees should seek legal counsel to fully understand the implications of this provision and to ensure they are prepared for the possibility of out-of-state arbitration.