Can Dog Haus require arbitration or litigation to be conducted outside of the franchisee's state?
Dog_Haus Franchise · 2025 FDDAnswer from 2025 FDD Document
outside the State of Illinois is void. However, a Franchise Agreement may provide for arbitration outside of Illinois.
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- Section 41 of the Illinois Franchise Disclosure Protection Act provides that any condition, stipulation or provision that purports to bind a person acquiring any franchise to waive compliance with the Act or any other law of Illinois is void.
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- Your rights upon termination and non-renewal of the Franchise Agreement are set forth in sections 19 and 20 of the Act.
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- The following language is added to the end of Item 5 of the Disclosure Document:
- We maintain a surety bond with Atlantic Specialty Insurance Company in the amount of $40,000 as a condition of registration in Illinois. The bond will expire when the surety is released from liability by the Illinois Attorney General or until the bond is cancelled.
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- No statement, questionnaire, or acknowledgement signed or agreed to by a franchise 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 franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
ILLINOIS ADDENDUM TO FRANCHISE AGREEMENT
THIS ADDENDUM TO FRANCHISE AGREEMENT (this "Addendum") dated, is intended to be a part of, and by this reference is incorporated into that certain Franchise Agreement (the "Franchise Agreement") dated, by and between DOG HAUS WORLDWIDE, LLC, a California limited liability company, as Franchisor, and, as Franchisee Defined terms contained in the Franchise Agreement shall have the identical meanings in this Addendum. 1. Illinois law governs the agreements between the parties to the Franchise Agreement. 2. Section 705/4 of the Illinois Franchise Disclosure Act of 1987 (the "Act") provides that any provision in the Franchise Agreement which designates jurisdiction or venue outside the State of Illinois is void.
Source: Item 23 — RECEIPTS (FDD pages 87–328)
What This Means (2025 FDD)
According to Dog Haus's 2025 Franchise Disclosure Document, the Illinois Addendum to the Franchise Agreement addresses the issue of jurisdiction and venue for disputes. Specifically, Section 705/4 of the Illinois Franchise Disclosure Act of 1987 states that any provision in the Franchise Agreement that designates jurisdiction or venue outside of Illinois is void. However, the agreement can stipulate that arbitration may occur outside of Illinois. This means that while Dog Haus cannot force an Illinois franchisee into litigation outside of Illinois, it can require arbitration to take place elsewhere.
This stipulation is significant for prospective Dog Haus franchisees in Illinois because it limits their legal recourse options within their home state. While they can't be forced to litigate outside of Illinois, they could be required to participate in arbitration in another state, which may increase their costs and logistical challenges in resolving disputes with Dog Haus. This could include travel expenses, the need to hire legal representation in the arbitration's location, and the inconvenience of being away from their business and home.
The Illinois Addendum also states that any condition, stipulation, or provision that attempts to waive compliance with the Illinois Franchise Disclosure Act or any other Illinois law is void. Additionally, the addendum clarifies that no statement, questionnaire, or acknowledgment signed by a franchisee can waive claims under Illinois franchise law, including claims of fraud in the inducement, or disclaim reliance on statements made by Dog Haus. This provision aims to protect franchisees from inadvertently relinquishing their rights under Illinois law during the franchise relationship.
In summary, while Dog Haus is restricted from requiring Illinois franchisees to engage in litigation outside the state, it retains the right to stipulate out-of-state arbitration. Franchisees should carefully consider these implications, along with the protections afforded to them under Illinois franchise law, before entering into a franchise agreement with Dog Haus.