What law governs matters relating to arbitration for the Cinnaholic franchise agreement?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
The following Addendum modifies and supersedes the Cinnaholic Franchising, LLC Franchise Agreement (the "Agreement") with respect to CINNAHOLIC® franchises offered or sold to either a resident of the State of Illinois or a non-resident who will be operating a CINNAHOLIC® franchise in the State of Illinois pursuant to the Illinois Franchise Disclosure Act of 1987, Ill. Comp. Stat. §§ 705/1 through 705/44, as follows:
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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 condition3) 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 22 — CONTRACTS (FDD pages 61–62)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, for franchisees operating in Illinois, Illinois law governs the franchise agreement. Specifically, while the agreement may allow arbitration to occur outside of Illinois, any provision that designates jurisdiction and venue for legal proceedings outside of Illinois is considered void under the Illinois Franchise Disclosure Act.
This means that if a Cinnaholic franchisee in Illinois has a dispute that goes to arbitration, the arbitration itself can take place in another state. However, the laws of Illinois will still apply to the interpretation and enforcement of the franchise agreement. This is designed to protect the rights of franchisees operating within Illinois, ensuring that they are not subject to potentially unfavorable legal environments in other states.
For prospective Cinnaholic franchisees in Illinois, this addendum provides an additional layer of legal protection. It ensures that they cannot be forced to litigate disputes in a distant or unfavorable jurisdiction, while still allowing for the possibility of arbitration outside of Illinois. Franchisees should consult with a legal professional to fully understand their rights and obligations under the Illinois Franchise Disclosure Act.