Franchisors and franchisees both breathed a sigh of relief recently when Illinois legislators passed Public Act 90-842, a modification of the state's Franchise Disclosure Act. The new legislation eliminates much of the state's review power of franchise disclosure documents.
The Illinois Franchise Disclosure Act of 1987 allowed state administrators to hold up the review process if certain phrases in disclosure documents weren't italicized or if administrators requested additional paperwork. The modification simplifies this process.
"[The previous version of the act] discouraged franchisors from doing business in Illinois," says Sen. Chris Lauzen (R-Geneva), sponsor of the bill in the Illinois Senate. "[The new version] ensures all the protections that should be in the law but makes it more fair, uniform, simple and less expensive."
Will other states follow suit? It's unlikely, says attorney Dennis Wieczorek, a partner with Chicago franchise law firm Rudnick & Wolfe. "[The modification] doesn't really teach anything other than if states go overboard in regulating, franchisors and franchisees [may] seek the same kinds of changes they did in Illinois." Since franchisors and franchisees can now operate under a lighter burden in Illinois, this could be a lesson well-learned for all states.
Rudnick & Wolfe, (312) 368-4087, fax: (312) 236-7516