Does the Cream Franchise Agreement specify if the non-compete radius is subject to state law?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 44–51)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, the franchise agreement includes state-specific riders that may modify the agreement's terms based on jurisdictional requirements. Specifically, for franchisees subject to franchise laws in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin, no statement can waive claims under applicable state franchise law or disclaim reliance on franchisor statements. This indicates that state laws play a role in governing the franchise relationship.
For franchisees in Illinois, the laws of Illinois govern the agreement, except for the U.S. Federal Arbitration Act and other federal laws. The Illinois Franchise Disclosure Act states that any provision designating jurisdiction or venue outside Illinois is void, although arbitration outside of Illinois is permitted. Additionally, any provision requiring a franchisee to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. These stipulations suggest that the enforceability and interpretation of non-compete provisions could be influenced by state-specific laws.
The franchise agreement also states that any state law regulating the offer or sale of franchises or governing the relationship of a franchisor and its franchisee, including the terms set forth on Attachment F, will not apply unless the jurisdictional requirements of such state law are met independently. This implies that while the agreement is generally governed by Ohio law, state laws may still apply if their jurisdictional requirements are independently satisfied, potentially affecting the non-compete provisions. Therefore, prospective franchisees should consult with legal counsel to understand how state laws may impact the enforceability of the non-compete clauses in their specific circumstances.