Illinois Franchise Rights-Renewal

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Illinois Franchise owners often invest thousands, perhaps millions, of dollars and countless hours in building and running their franchise businesses. The right to operate these franchise businesses is typically governed by a contract that is commonly referred to as a “Franchise Agreement.” These contracts often have onerous anti-competition provisions which apply to franchise owners upon termination of the franchise. Termination of a franchise can occur for cause or, under most Franchise Agreements, after a set period of time. The question that keeps many franchise owners up at night is, “what happens to my business if the franchisor does not renew my franchise?”

Luckily, the Illinois legislature has enacted legislation to protect franchise owners from the loss of their business. The Illinois Franchise Disclosure Act, 815 ILCS 705/1 et seq., provides broad protections for franchise owners in Illinois, including protection against wrongful termination of a franchise and nonrenewal of a franchise. Specifically, Section 20 of the Illinois Franchise Disclosure Act addresses a franchisor’s refusal to renew a franchise. Under Section 20, if a franchisor refuses to renew a franchise business after its contractual term expires, the franchisor must (1) repurchase the franchise or (2) waive the anti-competition provisions of the applicable Franchise Agreement.

The rights afforded by Section 20 of the Illinois Franchise Disclosure Act come with certain limitations and are subject to time periods that apply to the franchisor and franchise owner alike. Failure to strictly follow the time periods and understand these limitations can result in the loss of the rights afforded by Section 20.

The attorneys at Griffin Williams LLP stand ready to assist business owners throughout Illinois, including franchise owners, in protecting, preserving and ultimately, growing their businesses. If you are concerned about the nonrenewal of your Illinois franchise or the loss of your business in general, please feel free to contact us and learn the options that exist to save your business.