If a Cream franchisee is located in Illinois and the state-specific terms conflict with another term in the franchise agreement, which term prevails?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
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 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, for franchisees in Illinois, Indiana, Maryland, Michigan, Minnesota, Virginia, or Wisconsin, a specific provision addresses potential conflicts between the franchise agreement and state franchise laws. This provision states that no statement, questionnaire, or acknowledgment signed by a franchisee at the start of the franchise can waive claims under state franchise law, including claims of fraud, or disclaim reliance on statements made by Cream or its representatives.
Specifically for Illinois franchisees, the FDD outlines several key stipulations. First, the laws of Illinois govern the franchise agreement, except for matters covered by the U.S. Federal Arbitration Act and other federal laws. Second, any franchise agreement provision that designates jurisdiction or venue outside Illinois is void, although arbitration outside of Illinois is permitted. Third, any condition that requires a franchisee to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. Finally, the franchisee's rights upon termination or non-renewal are subject to sections 19 and 20 of the Illinois Franchise Disclosure Act.
In essence, if a Cream franchisee is based in Illinois and there's a conflict between the standard franchise agreement terms and these state-specific terms, the Illinois-specific terms will take precedence. This ensures that franchisees in these states are protected by their local franchise laws and cannot inadvertently waive their rights through standard agreement clauses. This type of clause is relatively common in franchise agreements to ensure compliance with varying state laws and protect both the franchisor and franchisee.