What law governs arbitration matters related to the Big Apple Bagels franchise agreement?
Big_Apple_Bagels Franchise · 2025 FDDAnswer from 2025 FDD Document
This Addendum is to a BAGELS Franchise Agreement dated , 20 between BAB Systems, Inc. and (Franchisee) to amend said Agreement to add the following: Illinois law governs the BAGELS Franchise Agreement. is void. outside of Illinois. In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a BAGELS Franchise Agreement that designates jurisdiction and venue in a forum outside of the State of Illinois However, a BAGELS Franchise Agreement may provide for arbitration to take place Illinois Franchise Disclosure Act.
i. All disputes, controversies or claims arising out of or relating to this Agreement, except for issues relating to the ownership, validity or registration of any name or Mark licensed hereunder, shall be submitted for arbitration to the American Arbitration Association on demand of either party. The demand shall be submitted to, and the arbitration proceedings shall be conducted in the major city nearest where Franchisor's principal business address is then located, and shall be heard by one arbitrator in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association. All matters within the scope of the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) shall be governed by it. This provision shall continue in full force and effect subsequent to and notwithstanding the expiration or termination of this Agreement.
g. Limitations of Claims. Except for claims against Franchisee concerning the under-reporting of gross revenue and/or the payment of monies due Franchisor from Franchisee, any and all claims arising out of or relating to this Agreement or the relationship among the parties hereto shall be barred unless an action or legal or arbitration proceeding is commenced within one (1) year from the date Franchisee or Franchisor knew of the facts giving rise to such claims.
In addition, Franchisee must give Franchisor written notice of at least fourteen (14) days prior to filing arbitration or litigation.
- f. Waiver of Jury Trial.
Each party irrevocably waives trial by jury in any action, proceeding or counterclaim, whether at law or in equity, brought by either party.
Source: Item 22 — CONTRACTS (FDD pages 86–87)
What This Means (2025 FDD)
According to Big Apple Bagels' 2025 Franchise Disclosure Document, for franchise agreements within Illinois, Illinois law governs the agreement. Specifically, the BAB Systems, Inc. Addendum to the BAGELS Franchise Agreement for the State of Illinois clarifies that any provision designating jurisdiction and venue outside of Illinois is void, aligning with Section 4 of the Illinois Franchise Disclosure Act. However, the franchise agreement may still provide for arbitration to take place outside of Illinois.
For disputes subject to arbitration, the Federal Arbitration Act (9 U.S.C. §§ 1 et seq.) governs all matters within its scope. This means that while Illinois law dictates the overall legal framework for the franchise agreement within the state, the procedural aspects of arbitration are managed at the federal level. The arbitration proceedings are to be conducted in the major city nearest where Big Apple Bagels' principal business address is located, following the Commercial Arbitration Rules of the American Arbitration Association, and will be heard by one arbitrator.
This dual governance ensures that Illinois franchisees are protected by state law regarding jurisdiction and venue, while also adhering to federal standards for arbitration processes. Franchisees should be aware that they are waiving their right to a jury trial and must adhere to specific timelines for initiating claims, as outlined in the franchise agreement. Any claims must be brought within one year from the date the franchisee knew of the facts giving rise to such claims, with a written notice of at least fourteen days prior to filing arbitration or litigation.