For City Publications franchises in Illinois, what must the franchisor do before the Initial Franchise/Development Fees are paid?
City_Publications Franchise · 2025 FDDAnswer from 2025 FDD Document
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 the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
Franchisees' right 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.
Payment of the Initial Franchise/Development Fees will be deferred until Franchisor has met its initial obligations to franchisee, and franchisee has commenced doing business. The financial assurance requirement was imposed by the Office of the Attorney General due to Franchisor's financial condition.
Source: Item 23 — RECEIPT (FDD pages 39–129)
What This Means (2025 FDD)
According to City Publications' 2025 Franchise Disclosure Document, for franchises in Illinois, the payment of the Initial Franchise/Development Fees will be deferred until City Publications has fulfilled its initial obligations to the franchisee and the franchisee has started conducting business. This financial assurance requirement was mandated by the Office of the Attorney General due to City Publications' financial condition.
This means that a prospective City Publications franchisee in Illinois will not be required to pay the initial franchise fee until City Publications has met its initial obligations, such as providing access to proprietary materials, training, and the exclusive territory. This provides a level of protection for the franchisee, ensuring that City Publications delivers on its initial promises before receiving the franchise fee.
This requirement was imposed due to City Publications' financial condition, which suggests that prospective franchisees should carefully evaluate the company's financial stability and ability to support its franchisees. It is important for potential franchisees to conduct thorough due diligence and seek professional advice before investing in a City Publications franchise.