FRANCHISING IN ILLINOIS
Registration or Filing Required?
Yes (Registration)
Business Opportunity Laws?
Yes
Illinois is a franchise registration state. Before offering or selling a franchise in the state, you must first register your FDD with the Franchise Bureau of the Illinois Attorney General. The Franchise Bureau oversees the FDD registration process and enforcement of Illinois’s franchise laws. The initial FDD registration fee is $500 and the annual renewal fee is $100. Registration requires annual renewal within 120 days of your fiscal year end.
Under Illinois Law, 815 ILCS 705/3 of the Illinois Franchise Disclosure Act defines a franchise as including any written or oral agreement that expressly or implicitly provides for the marketing, sale or distribution of products or services: (a) under a marketing plan or system that is prescribed or suggested in substantial part by the franchisor; (b) that are substantially associated with the franchisor’s trademark; and (c) that involves the direct or indirect payment of a franchise fee of $500 or more.
The Illinois Franchise Disclosure Act is limited to franchise transactions that occur within the state, involve residents of the state, and/or involve franchised businesses that will be located or operated within the state. The Illinois Disclosure Act also exempts and excludes from its regulatory reach certain transactions that include fractional franchises, on-premises concessions, certification and testing services, and transactions involving the Petroleum Marketing Practices Act.
Illinois franchisees must sign an Illinois addendum to ensure that your FDD and franchise agreement comply with the Illinois Franchise Disclosure Act. These laws prohibit certain actions on the part of the franchisor such as prohibiting disparate treatment of franchisees and limiting franchisor termination and non-renewal rights.