Does the Illinois Addendum to the Bonchon Area Development Agreement allow for arbitration to take place outside of Illinois?
Bonchon Franchise · 2025 FDDAnswer from 2025 FDD Document
ILLINOIS ADDENDUM TO AREA DEVELOPMENT AGREEMENT
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- Illinois law governs the Franchise Agreement(s).
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- 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, a franchise agreement may provide for arbitration to take place outside of Illinois.
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- Your rights upon Termination and Non-Renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- In conformance with section 41 of the Illinois Franchise Disclosure Act, 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.
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- No statement, questionnaire, or acknowledgement signed or agreed to by a franchisee (or area developer) in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- This Addendum may be executed in counterparts, which together shall constitute one and the same instrument. Signatures via DocuSign, .PDF file, facsimile, or other electronic format have the same force and effect as originals.
Source: Item 23 — RECEIPTS (FDD pages 92–536)
What This Means (2025 FDD)
According to Bonchon's 2025 Franchise Disclosure Document, the Illinois Addendum to the Area Development Agreement addresses the issue of arbitration. Specifically, while Illinois law governs the Franchise Agreement(s), the addendum clarifies the implications of Section 4 of the Illinois Franchise Disclosure Act regarding jurisdiction and venue.
The addendum explicitly states that any provision designating jurisdiction and venue outside of Illinois is void. However, it includes an exception: a franchise agreement may still provide for arbitration to occur outside the state of Illinois. This means that while Bonchon cannot force a franchisee into litigation outside of Illinois, the franchise agreement can stipulate that arbitration take place elsewhere.
This distinction is important for prospective Bonchon franchisees in Illinois. While they are protected from having to litigate disputes in a distant or inconvenient forum, they should carefully review the franchise agreement to understand where arbitration might be required. Franchisees should consider the potential costs and logistical challenges of arbitrating a dispute outside of Illinois, even if it is permitted by the addendum.