Does the Crab N Spice Rider allow a franchisee to waive compliance with the Illinois Act?
Crab_N_Spice Franchise · 2024 FDDAnswer from 2024 FDD Document
| This Rider amends the Agreement "Agreement"), between Crab N Spice Group, a California corporation ("CNS Franchising") and , a ("Franchisee"). | dated (the |
|---|---|
| 1. | |
| Definitions. | |
| Capitalized terms used but not defined in this Rider have the meanings given | |
| in the Agreement. | |
| The "Illinois Act" means the Illinois Franchise Disclosure Act of 1987. | |
| 2. | |
| Governing Law and Jurisdiction. Notwithstanding any provision of the Agreement to | |
| the contrary, the Agreement is governed by Illinois law. The parties irrevocably submit to the | |
| jurisdiction and venue of the federal and state courts in Illinois, except for matters which the | |
| Agreement provides will be resolved by arbitration. | |
| 3. | aware of |
| Limitation of Claims. No action can be maintained to enforce any liability created by the | |
| Illinois Act unless brought before the expiration of 3 years from the act or transaction constituting | |
| the violation upon which it is based, the expiration of 1 year after Franchisee become | |
| facts or circumstances reasonably indicating that Franchisee may have a claim for relief in respect | |
| to conduct governed by the Illinois Act, or 90 days after delivery to the Franchisee of a written | |
| notice disclosing the violation, whichever shall first expire. | |
| 4. | |
| Waivers Void. Notwithstanding any provision of the Agreement to the contrary, any | |
| condition, stipulation, or provision purporting to bind Franchisee to waive compliance with any | |
| provision of the Illinois Act or any other law of the State of Illinois is void. This Section shall not | |
| prevent Franchisee from entering into a settlement agreement or executing a general release | |
| regarding a potential or actual lawsuit filed under any of the provisions of this Act, nor shall it | |
| prevent the arbitration of any claim pursuant to the provisions of Title 9 of the United States Code. | |
| 5. | |
| Fee Deferral. | |
| Payment of Initial and Development Fees will be deferred until the | |
| franchisor has met its initial obligations to franchisee, and franchisee has commenced business | |
| operations. This financial assurance requirement was imposed by the Office of the Illinois | |
| Attorney general due to franchisor's financial condition. | |
| 6. | |
| Acknowledgements. No statement, questionnaire or acknowledgement signed or agreed | |
| to y a franchisee in connection |
Source: Item 22 — CONTRACTS (FDD pages 50–51)
What This Means (2024 FDD)
According to the 2024 Crab N Spice Franchise Disclosure Document, specifically the Illinois Rider to the Franchise Agreement, franchisees cannot waive compliance with the Illinois Franchise Disclosure Act. The rider explicitly states that any provision in the agreement that attempts to bind the franchisee to waive compliance with the Illinois Act or any other Illinois law is void. This protects the franchisee's rights under Illinois law.
However, this section does not prevent a Crab N Spice franchisee from entering into a settlement agreement or executing a general release regarding a potential or actual lawsuit filed under the Illinois Act. It also does not prevent the arbitration of any claim pursuant to the provisions of Title 9 of the United States Code. This means that while franchisees cannot be forced to waive their rights upfront, they can voluntarily settle disputes or agree to arbitration.
This provision is favorable for prospective Crab N Spice franchisees in Illinois, as it ensures that they cannot be compelled to give up their legal protections under the Illinois Franchise Disclosure Act. It aligns with franchise regulations in many states that aim to protect franchisees from overreaching franchisor demands, while still allowing for dispute resolution through settlement or arbitration.