Is arbitration outside of Illinois permitted in the Itan Franchise Agreement and Supplemental Agreements?
Itan Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the Illinois Franchise Disclosure Act, 815 ILCS 705, the Disclosure Document and the Franchise Agreement and Supplemental Agreements are amended as follows:
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- Illinois law shall apply to and govern the Franchise Agreement and Supplemental Agreements.
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- In accordance with Section 4 of the Illinois Franchise Disclosure Act, any provision in the Franchise Agreement and Supplemental Agreements that designated jurisdiction and venue in a forum outside of the State of Illinois is void. However, the Franchise Agreement and Supplemental Agreements may provide for arbitration to take place outside of Illinois.
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- Your rights upon Termination and Non-Renewal are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- In conformance with Section 41 of the Illinois Franchise Disclosure Act, 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.
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- The Franchise Agreement and Supplemental Agreements are amended to state the following:
To the extent that any provision in the Illinois State Addendum is inconsistent with any provision in this Agreement, the provision in the Illinois State Addendum shall control.
Source: Item 23 — RECEIPT (FDD pages 44–190)
What This Means (2025 FDD)
According to Itan's 2025 Franchise Disclosure Document, for franchisees in Illinois, the Franchise Agreement and Supplemental Agreements can allow for arbitration to take place outside of Illinois. This is an exception to the general rule that any provision designating jurisdiction and venue in a forum outside of Illinois is void, as stated in Section 4 of the Illinois Franchise Disclosure Act.
This means that while Itan cannot force a franchisee to litigate a dispute outside of Illinois, the franchisee can agree to arbitrate disputes in another state. Arbitration is a form of alternative dispute resolution where a neutral third party hears the arguments and renders a decision. This decision can be binding, meaning it is enforceable in court, or non-binding, depending on the terms of the arbitration agreement.
For a prospective Itan franchisee in Illinois, this clause provides flexibility. It allows them to potentially resolve disputes more quickly and cost-effectively through arbitration, possibly outside of Illinois if agreed upon. However, it's crucial for franchisees to understand the implications of agreeing to arbitration, including the potential loss of certain legal rights and the binding nature of the arbitrator's decision.