In Illinois, is a provision in a Cinnaholic franchise agreement designating jurisdiction and venue outside of Illinois valid?
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 law governs the franchise agreement. The FDD states that any provision in the franchise agreement that designates jurisdiction and venue in a forum outside of Illinois is void, as per Section 4 of the Illinois Franchise Disclosure Act. This means that if a Cinnaholic franchisee in Illinois were to have a legal dispute with the company that is litigated, the case must be heard within the state of Illinois, regardless of what the franchise agreement might say.
However, the FDD also clarifies an exception to this rule. While jurisdiction and venue cannot be designated outside of Illinois, the franchise agreement may still provide for arbitration to take place outside of Illinois. Arbitration is a form of dispute resolution where a neutral third party hears both sides of a case and makes a decision, and this process can occur outside of Illinois even if Illinois law governs the agreement.
In summary, a Cinnaholic franchise agreement cannot force an Illinois franchisee to litigate a dispute outside of Illinois. However, the agreement can stipulate that any arbitration proceedings occur outside of the state.