Are the termination and non-renewal provisions in the Kidokinetics Franchise Agreement and FDD always enforceable under Illinois law?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
The termination and non-renewal provisions in the Franchise Agreement and the FDD may not be enforceable under Sections 19 and 20 of the Illinois Franchise Disclosure Act.
Under Section 705/27 of the Illinois Franchise Disclosure Act, no action for liability under the Illinois Franchise Disclosure Act can be maintained unless brought before the expiration of three years after the act or transaction constituting the violation upon which it is based, the expiration of one year after you become aware of facts or circumstances reasonably indicating that you may have a claim for relief in respect to conduct governed by the Act, or 90 days after delivery to you of a written notice disclosing the violation, whichever shall first expire. To the extent that the Franchise Agreement is inconsistent with the Illinois Franchise Disclosure Act, Illinois law will control and supersede any inconsistent provision(s).
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.
Fee Deferral:
The Illinois Attorney General's Office has imposed the deferral requirement because of our financial condition. Item 5 and Item 7 of the FDD and Section 5.1 of the Franchise Agreement are hereby revised to state that payment of all initial fees, including the Franchise Fee, shall be deferred until after all of the Franchisor's initial obligations are complete and the Franchise is open for business.
See the last page of this Exhibit G for your signature.
INDIANA
Item 8 of the FDD is amended to add the following:
Under Indiana Code Section 23-2-2.7-1(4), we will not accept any rebates from any person with whom you do business or associate in relation to transactions between you and the other person, other than for compensation for services rendered by us, unless the rebate is properly accounted for and submitted to you.
Item 17 of the FDD is amended to add the following:
Source: Item 23 — RECEIPT (FDD pages 59–205)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, the termination and non-renewal provisions within the Franchise Agreement and the FDD may not be fully enforceable under Illinois law, specifically under Sections 19 and 20 of the Illinois Franchise Disclosure Act. This means that certain aspects of how Kidokinetics can terminate or choose not to renew a franchise agreement might be subject to limitations or modifications based on Illinois state law.
Illinois law dictates that any part of the Franchise Agreement that clashes with the Illinois Franchise Disclosure Act will be superseded by Illinois law. This ensures that franchisees in Illinois are protected by the state's franchise regulations, regardless of what the franchise agreement might state. Furthermore, franchisees cannot waive their rights under Illinois franchise law, including claims related to fraud in the inducement, or disclaim reliance on statements made by Kidokinetics or its representatives. This provision overrides any conflicting terms in documents signed in connection with the franchise.
Additionally, Illinois law mandates that any court litigation must occur within Illinois federal or state courts, and all dispute resolutions, whether through arbitration or litigation, are subject to Illinois law. The governing law or choice of law clause described in the FDD and contained in the Franchise Agreement is not enforceable under Illinois law. This ensures that Illinois law applies to disputes arising from the franchise relationship within the state, regardless of what the franchise agreement specifies. This protects the franchisee by ensuring disputes are resolved under Illinois law within the state's jurisdiction.