For City Publications franchises in Illinois, when is the payment of the Initial Franchise/Development Fees due?
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, the payment of the Initial Franchise/Development Fees for franchises in Illinois is deferred. This means that franchisees are not required to pay these fees until City Publications has fulfilled its initial obligations to the franchisee and the franchisee has commenced business operations. This financial assurance requirement was mandated by the Illinois Office of the Attorney General due to City Publications' financial condition.
This deferral of fees is a significant benefit for prospective City Publications franchisees in Illinois. It reduces the initial financial burden and risk, as franchisees only need to pay the fees after the franchisor has provided the necessary support and they have started generating revenue. This arrangement provides an added layer of security, ensuring that franchisees are not paying upfront fees without receiving the promised services and support from City Publications.
It is important for potential franchisees to understand the specific initial obligations that City Publications must fulfill before the fees become due. These obligations should be clearly outlined in the franchise agreement. Franchisees should also confirm what constitutes "commencing business" to avoid any misunderstandings about when the payment is triggered. This deferred payment structure is not typical in the franchise industry, where initial fees are usually due upon signing the franchise agreement, so it represents a potentially favorable condition for franchisees in Illinois.