Does the Cream franchise agreement require arbitration for disputes related to development rights?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
AGREED* and executed and delivered under seal by the parties hereto as of the day and year
of the Lease.
ATTACHMENT F TO FRANCHISE AGREEMENT
STATE-SPECIFIC RIDERS
The state-specific terms below will apply to this Agreement and modify the terms to this Agreement, if the transaction satisfies the jurisdictional requirements described below for any particular state law and is not otherwise exempt from such law. The provisions of multiple states may apply.
The following provision applies if you or the franchise granted hereby are subject to the franchise laws in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin: No statement, questionnaire, or acknowledgment 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 any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
ILLINOIS
The following provisions are annexed to and form part of this Agreement if and only if, and in such case to the extent that: (a) you are domiciled in the State of Illinois or (b) the offer of the franchise is made or accepted in the State of Illinois and your franchised business is or will be operated in the State of Illinois.
- The following language is added to the end of the Agreement:
Except for the U.S. Federal Arbitration Act and other federal laws in the U.S., the laws of the State of Illinois will govern this Agreement.
Section 4 of the Illinois Franchise Disclosure Act provides that any provision in a franchise agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a franchise agreement may provide for arbitration outside of Illinois.
Section 41 of the Illinois Franchise Disclosure Act provides that 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.
Your rights upon termination and non-renewal of a franchise agreement are subject to sections 19 and 20 of the Illinois Franchise Disclosure Act.
MARYLAND
The following provisions are annexed to and form part of this Agreement if and only if, and in such case to the extent that: (a) you are a resident of the State of Maryland; or (b) your franchised business is or will be operated in the State of Maryland; or (c) the offer of the franchise was made or accepted in the State of Maryland.
- The following is added to the end of Sections 12.C(4), 12.E, 13.A(8), and 15.D of the Agreement:
Pursuant to COMAR 02.02.08.16L, any release required as a condition of renewal and/or assignment/transfer will not apply to claims arising under the Maryland Franchise Registration and Disclosure Law.
2.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
Based on the 2025 FDD, the Cream franchise agreement includes state-specific riders that address arbitration, particularly concerning disputes related to development rights. For instance, in Maryland, there's a note that it could be an unfair or deceptive practice to require a franchisee to waive their right to file a lawsuit in Maryland for violations of the Maryland Franchise Registration and Disclosure Law. However, the FDD also acknowledges a dispute about whether this forum selection requirement is legally enforceable, considering the Federal Arbitration Act.
Specifically for Illinois, the FDD states that while the laws of Illinois govern the agreement (except for the U.S. Federal Arbitration Act and other federal laws), a franchise agreement may provide for arbitration outside of Illinois, even though the Illinois Franchise Disclosure Act generally voids any provision designating jurisdiction or venue outside the state. This suggests that Cream's franchise agreement might allow for arbitration of disputes related to development rights outside of Illinois, despite the state's regulations.
For a prospective Cream franchisee, this means that the enforceability and location of arbitration for disputes related to development rights can vary depending on the state where the franchise is located or where the franchisee resides. It is important to carefully review the state-specific riders and consult with a legal professional to understand the implications of these provisions, especially concerning the arbitration of disputes related to the Cream franchise agreement and development rights.