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Franchise Lawyers Serving Illinois

What You Need to Know About Franchising

Illinois

BIG things happen in Illinois. They have the tallest building in the U.S., the largest public library in the WORLD, the largest bakery (1.8 million sq. ft.!), and Chicago is the third-largest city in the country. Illinois is also home to the franchise giant McDonald’s. Their headquarters is located in Oak Brook.

Illinois is a registration state. Franchise businesses must register their business with the state and pay a $500 registration fee. The annual FDD renewal fee is $100.


Illinois Franchise Filing Fees

$500

Initial

$100

Renewal*

$25

Pre-Effective Amendment**

$100

Post-Effective Amendment**

*Renewal filings must be submitted within 120 days after your fiscal year end or Illinois will require the filing be resubmitted as a new initial filing with payment of the initial fee.

**Post-Effective Amendment filings must be submitted if you are making a material change to your FDD after your initial or renewal filing is approved. Pre-Effective Amendment filings are submitted if you are making a material change to your FDD but your initial filing or renewal filing is not yet approved. No further sales may be made in Illinois until the amended FDD is approved and the registration is effectively amended.

Notes

Illinois does not require notary on the application required for each filing.

The filing fees for all filings must be made via check made payable to “State of Illinois”.

If you are in your first year of franchising, Illinois will accept Compiled financials, but will automatically require a financial assurance if the equity is below $100,000. The state may also require the submission of unaudited financials to supplement the compiled or audited financials in certain circumstances.

Financial Assurance – If the Administrator deems you to not have adequate funding to fulfill all your pre-opening obligations to a franchisee, or if Shareholders’ Equity is below $100,000, they will require some form of financial assurance be instituted, such as an escrow, impoundment or deferral of initial fees, or the posting of a surety bond. In some cases, the Administrator will allow other forms of financial assurance such as Certificate of Deposit or a Guaranty of Performance by a parent or affiliate company with strong financials.

Did You Know?

Illinois is home to more than 70 of America’s largest companies, including Boeing, Kraft and Caterpillar

(Forbes)

Top industries in Illinois are manufacturing, education, biotechnology, and agriculture

(foreignusa.com)

117 million tourists visit Illinois on average, creating countless opportunities for small business

(chicagotribune.com)

Illinois Franchise Exemptions

Large Franchisors – exemption from registration only

Large Franchisee – exemption from registration only

Large Investment – exemption from registration only

Fractional Franchises – exemption from registration and disclosure

Insiders – exemption from registration only

Isolated Sales – exemption from registration and disclosure

Renewal of Existing Agreement – exemption from registration and disclosure

Sales by Bank – exemption from registration and disclosure

Non-Franchisor Exemptions

CORE

Flat Fee Program for Franchisors

Spadea Lignana’s CORE program for franchisors is a cost-effective and practical solution for the ongoing legal needs of franchisors, including but not limited to, FDD updates, state registrations and franchise agreement executions. Through a proprietary cloud-based system we can effectively and efficiently manage FDD Disclosures and Franchise Agreement executions for fair flat fees billed monthly. We believe that hourly billing, although necessary in certain circumstances like complex M&A deals and litigation, can weigh on the relationship between client and attorney.  By coming up with a fair flat monthly fee, the uncomfortable negotiating of whether or not a 6 minute increment in your bill for replying to an email was legitimate goes away.

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Attorneys Who Understand IL Franchise Law

Franchise laws vary from state to state, and it can be difficult to understand the requirements. Spadea Lignana has streamlined the process to ensure you remain compliant as you grow nationally.

We also work with franchises in Wisconsin, Michigan, and Chicago.

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