For City Wide franchises in Illinois, is a provision designating jurisdiction and venue outside of Illinois valid?
City_Wide Franchise · 2025 FDDAnswer from 2025 FDD Document
ILLINOIS
Illinois Addendum to the Disclosure Document and Franchise Agreement
Illinois law governs the Agreements.
In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a form outside of the state of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
Section 19 of the Illinois Franchise Disclosure Act sets forth the conditions and notice requirements for termination of a franchise agreement.
Section 20 of the Illinois Franchise Disclosure Act sets forth the conditions of non-renewal of a franchise agreement, along with the compensation requirements.
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, franchise seller, or other person acting on behalf of a Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
[remainder of page blank]
Source: Item 22 — CONTRACTS (FDD page 65)
What This Means (2025 FDD)
According to City Wide's 2025 Franchise Disclosure Document, Illinois franchisees are protected by the Illinois Franchise Disclosure Act regarding jurisdiction and venue. Specifically, any provision in the franchise agreement that designates jurisdiction and venue outside of Illinois is considered void under Illinois law. This means that if a dispute arises, an Illinois City Wide franchisee generally cannot be forced to litigate the matter in another state.
However, the FDD stipulates an important exception: the franchise agreement may still include a provision that requires arbitration to take place outside of Illinois. Arbitration is a form of alternative dispute resolution where a neutral third party hears the case and makes a decision, which can be binding. So, while City Wide cannot force a franchisee into an out-of-state court, they can potentially require out-of-state arbitration.
Furthermore, the Illinois Addendum also states that any condition, stipulation, or provision that attempts to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. This protects the franchisee from unknowingly giving up their rights under Illinois law. Additionally, no statement, questionnaire, or acknowledgement signed by a franchisee can waive claims under state franchise law, including fraud in the inducement, or disclaim reliance on behalf of City Wide. This provision supersedes any other term of any document executed in connection with the franchise.