Can Cinnaholic require arbitration or litigation to be conducted outside of the franchisee's state?
Cinnaholic Franchise · 2025 FDDAnswer from 2025 FDD Document
- (F) A PROVISION REQUIRING THAT ARBITRATION OR LITIGATION BE CONDUCTED OUTSIDE THIS STATE.
THIS SHALL NOT PRECLUDE THE FRANCHISEE FROM ENTERING INTO AN AGREEMENT, AT THE TIME OF ARBITRATION, TO CONDUCT ARBITRATION AT A LOCATION OUTSIDE THIS STATE.
- (G) A PROVISION WHICH PERMITS A FRANCHISOR TO REFUSE TO PERMIT A TRANSFER OF OWNERSHIP OF A FRANCHISE, EXCEPT FOR GOOD CAUSE.
THIS SUBDIVISION DOES NOT PREVENT A FRANCHISOR FROM EXERCISING A RIGHT OF FIRST
REFUSAL TO PURCHASE THE FRANCHISE.
GOOD CAUSE SHALL INCLUDE, BUT IS NOT LIMITED TO:
ADDENDUM REQUIRED BY THE STATE OF ILLINOIS
-
- Illinois law governs the Franchise Agreement(s).
-
- 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.
-
- 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.
-
- Your rights upon Termination and Non-Renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
-
- 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.
-
- 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 provis There may also be court decisions that supersede the franchise agreement or related agreements concerning your relationship with the franchisor.
Franchise agreement provisions, including those summarized in Item 17 of the Franchise Disclosure Document, are subject to state law.
- **3.
Site of Arbitration, Mediation, and/or Litigation.** In any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation.
In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.
Source: Item 11 — FRANCHISOR'S ASSISTANCE, ADVERTISING, COMPUTER SYSTEMS, AND TRAINING (FDD pages 27–35)
What This Means (2025 FDD)
According to the 2025 Cinnaholic Franchise Disclosure Document, whether Cinnaholic can require arbitration or litigation to be conducted outside of the franchisee's state depends on the state where the franchise is located. For instance, Michigan law states that any franchise agreement provision requiring arbitration or litigation to be conducted outside of Michigan is void and cannot be enforced against the franchisee. However, a franchisee can agree at the time of arbitration to conduct it outside of Michigan. Similarly, Illinois law specifies that any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void, although a franchise agreement may provide for arbitration to take place outside of Illinois.
For a Cinnaholic franchisee in Washington, in any arbitration or mediation involving a franchise purchased in Washington, the arbitration or mediation site will be either in the state of Washington, or in a place mutually agreed upon at the time of the arbitration or mediation, or as determined by the arbitrator or mediator at the time of arbitration or mediation. In addition, if litigation is not precluded by the franchise agreement, a franchisee may bring an action or proceeding arising out of or in connection with the sale of franchises, or a violation of the Washington Franchise Investment Protection Act, in Washington.
These stipulations are important for prospective Cinnaholic franchisees to consider, as they dictate where legal proceedings must occur. This can significantly impact the cost and convenience of resolving disputes with the franchisor. Franchisees should be aware of their state's specific laws regarding forum selection clauses in franchise agreements and understand their rights in case of a legal dispute with Cinnaholic.