Under what circumstances is the governing law provision in Article 18.F of the Casiola Franchise Agreement prohibited?
Casiola Franchise · 2024 FDDAnswer from 2024 FDD Document
- Article 18.F. of the Franchise Agreement, under the heading "Governing Law", shall be amended by the addition of the following statement added after the end of the last sentence of Article 18.F. of the Franchise Agreement:
Illinois Addendum: Illinois law governs the agreements between the parties to this franchise.
Section 4 of the Illinois Franchise Disclosure Act Provides that any provision in a Franchise Agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a Franchise Agreement may provide for arbitration in a venue outside Illinois.
Source: Item 23 — RECEIPTS (FDD pages 47–209)
What This Means (2024 FDD)
According to Casiola's 2024 Franchise Disclosure Document, Article 18.F, which pertains to the governing law, is amended for franchisees in Illinois. Specifically, the Illinois Franchise Disclosure Act states that any provision in the Franchise Agreement that designates jurisdiction or venue outside of Illinois is considered void. This means that if a dispute arises and the standard Franchise Agreement stipulates that it must be resolved in a state other than Illinois, that provision will not be enforceable for Casiola franchisees operating in Illinois.
However, the Illinois amendment clarifies an exception to this rule. While the agreement cannot force an Illinois franchisee to litigate outside of Illinois, it can stipulate that arbitration may occur in a venue outside the state. This distinction is important because arbitration is often a quicker and less expensive method of dispute resolution compared to traditional litigation.
In essence, this amendment ensures that Casiola franchisees in Illinois are protected by their state's franchise laws, preventing them from being compelled to resolve disputes in potentially inconvenient or costly out-of-state venues through litigation. However, they may still be required to participate in arbitration outside of Illinois, if the Franchise Agreement specifies such a provision.