Under what conditions can the Cream Franchise Agreement or Area Development Agreement provide for 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 or Area Development Agreement that designates jurisdiction or venue outside the State of Illinois is void. However, a Franchise Agreement or Area Development Agreement may provide for arbitration outside of Illinois.
Source: Item 23 — RECEIPTS (FDD pages 61–192)
What This Means (2025 FDD)
According to Cream's 2025 Franchise Disclosure Document, Section 4 of the Illinois Franchise Disclosure Act generally voids any provision in a franchise agreement or area development agreement that designates jurisdiction or venue outside of Illinois. However, there is a specific exception to this rule.
Specifically, both the Franchise Agreement and the Area Development Agreement may provide for arbitration to occur outside of Illinois, despite the general prohibition against out-of-state jurisdiction or venue. This exception allows Cream to include clauses that mandate arbitration in a location other than Illinois, which could be beneficial to Cream.
This condition applies if the franchisee is domiciled in Illinois, or if the offer of the franchise is made or accepted in Illinois and the franchised business is or will be operated in Illinois. This information is crucial for prospective Cream franchisees in Illinois to understand their rights and obligations regarding dispute resolution.