In Illinois, when is the payment of the Initial Franchise/Development Fees for a Cinnaholic franchise deferred until?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
ADDENDUM REQUIRED BY THE STATE OF ILLINOIS
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- Illinois law governs the Franchise Agreement(s).
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- Payment of Initial Franchise/Development Fees will be deferred until Franchisor has met its initial obligations to franchisee, and franchisee has commenced doing business. This financial assurance requirement was imposed by the Office of the Illinois Attorney General due to Franchisor's financial condition.
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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 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 behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to Cinnaholic's 2025 Franchise Disclosure Document, Illinois franchisees benefit from a specific addendum regarding the payment of Initial Franchise/Development Fees. This addendum stipulates that the payment of these fees is deferred until Cinnaholic has fulfilled its initial obligations to the franchisee.
Specifically, the payment is delayed until two conditions are met: first, Cinnaholic must have met all of its initial obligations as outlined in the franchise agreement. Second, the franchisee must have commenced business operations. This requirement was mandated by the Office of the Illinois Attorney General due to Cinnaholic's financial condition.
This deferral provides a significant financial assurance for prospective Cinnaholic franchisees in Illinois. It ensures that franchisees do not have to pay the initial fees until Cinnaholic has provided the necessary support and the franchisee is ready to start generating revenue. This can reduce the initial financial burden and risk for new franchisees, aligning the payment of fees with the commencement of business operations.