In Illinois, what financial assurance requirement was imposed on Cr3 American Exteriors?
Cr3_American_Exteriors Franchise · 2025 FDDAnswer from 2025 FDD Document
ILLINOIS
As to franchises governed by the Illinois Franchise Disclosure Act, if any of the terms of the Disclosure Document are inconsistent with the terms below, the terms below control.
Illinois law governs the Franchise Agreement.
- a 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.
- b The conditions under which your Franchise Agreement can be terminated and your rights upon nonrenewal may be affected by Sections 19 and 20 of the Illinois Franchise Disclosure Act.
- c In conformance with Section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation, or provision of the Franchise Agreement purporting to bind you to waive compliance with any provision of the Illinois Franchise Disclosure Act or any other law of the State of Illinois is void.
Item 5 of the FDD and Item 4 of the Franchise Agreement are modified with the addition of the following language:
"Payment of the Initial Fees will be deferred until Franchisor has met its 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."
Source: Item 23 — RECEIPTS (FDD pages 53–150)
What This Means (2025 FDD)
According to Cr3 American Exteriors' 2025 Franchise Disclosure Document, a specific financial assurance requirement is in place for franchises governed by the Illinois Franchise Disclosure Act. The FDD states that the payment of initial fees will be deferred until Cr3 American Exteriors has fulfilled its obligations to the franchisee and the franchisee has commenced business operations.
This requirement was mandated by the Office of the Illinois Attorney General due to Cr3 American Exteriors' financial condition. This means that prospective franchisees in Illinois will not be required to pay the initial franchise fee upfront. Instead, the payment is delayed until Cr3 American Exteriors has met its initial obligations, such as providing training and support, and the franchisee has started operating their business.
This deferred payment structure offers a significant benefit to franchisees in Illinois, as it reduces their initial financial risk. It ensures that franchisees are not paying fees before Cr3 American Exteriors has provided the necessary support to get their business off the ground. This arrangement provides an added layer of protection for franchisees in Illinois, addressing concerns related to the franchisor's financial stability.
Prospective franchisees should carefully review Item 5 of the FDD and Item 4 of the Franchise Agreement, which are modified by this addendum. They should also seek legal counsel to fully understand their rights and obligations under the Illinois Franchise Disclosure Act.