Is it permissible for a Cream franchise agreement to mandate arbitration outside of Illinois?
Cream Franchise · 2025 FDDAnswer from 2025 FDD Document
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.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, a franchise agreement may provide for arbitration outside of Illinois, even though Section 4 of the Illinois Franchise Disclosure Act typically voids any provision designating jurisdiction or venue outside of the state. This exception for arbitration is specifically noted in the Illinois-specific addendum to the franchise agreement.
This means that if a Cream franchisee is domiciled in Illinois, or if the franchise offer was made or accepted in Illinois and the franchised business operates there, the franchise agreement can still require arbitration to take place outside of Illinois. This is an important consideration for prospective franchisees in Illinois, as it could mean incurring additional travel and legal costs if a dispute arises that requires arbitration.
It is also important to note that Section 41 of the Illinois Franchise Disclosure Act prevents Cream from including any condition that would bind a franchisee to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law. Additionally, the franchisee's rights upon termination and non-renewal are protected by sections 19 and 20 of the Illinois Franchise Disclosure Act.