Illinois franchise termination law: good cause and a 30-day cure limit

What the Illinois Franchise Disclosure Act of 1987 says about good cause, a cure period that need never exceed 30 days, non-renewal, remedies and time limits.

Read from a mirror of the statute (Justia's reproduction of the 2025 Illinois Compiled Statutes; ilga.gov could not be reached). Check the official text before relying on any detail here.

Under the Illinois Franchise Disclosure Act of 1987, it is a violation for a franchisor to terminate a franchise of a franchised business located in Illinois before the end of its term except for good cause (815 ILCS 705/19). Good cause includes the franchisee's failure to comply with any lawful provisions of the franchise or other agreement and to cure the default after being given notice and a reasonable opportunity to cure, which in no event need be more than 30 days. The section sets no minimum number of notice days beyond a reasonable opportunity. The notice and the agreement control a reader's own dates, and an Illinois lawyer can advise.

Grounds that need no notice or cure

815 ILCS 705/19(c) says good cause includes, without the requirement of notice and an opportunity to cure, situations in which the franchisee:

makes an assignment for the benefit of creditors or a similar disposition of the assets of the franchise business;
voluntarily abandons the franchise business;
is convicted of a felony or other crime that substantially impairs the goodwill associated with the franchisor's trademark;
repeatedly fails to comply with the lawful provisions of the franchise or other agreement.

The statute says good cause includes these but is not limited to them, so the list is not closed. See incurable defaults and cross-default and repeated default.

Coverage

A franchise under the act needs a marketing plan, an association with the franchisor's mark, and a required franchise fee of $500 or more paid to the franchisor or an affiliate, directly or indirectly (815 ILCS 705/2). Sections 19 and 20 apply to a franchised business located in Illinois. Whether the reader's franchise meets these tests is for the reader or an Illinois lawyer to check. This page gives no verdict.

Non-renewal

A franchisor violates the act if it refuses to renew a franchise of a franchised business located in Illinois without compensating the franchisee, by repurchase or other means, for the diminution in value of the franchised business caused by the expiration, in either of two cases (815 ILCS 705/20). One is where the agreement bars the franchisee from continuing substantially the same business under another trademark in the same area. The other is where the franchisee was not sent notice of the intent not to renew at least 6 months before the expiration date. See franchise non-renewal explained.

Time limits come first in Illinois

Section 27 sets three clocks for a section 26 action, and the one that expires first controls. The action must be brought before the earliest of: 3 years after the act or transaction constituting the violation; 1 year after the franchisee becomes aware of facts or circumstances reasonably indicating a possible claim for relief in respect to conduct governed by the act; or 90 days after delivery to the franchisee of a written notice disclosing the violation.

That makes the date a notice was delivered, and the date a franchisee learned the relevant facts, matter more than in most states. Which clock applies to a given situation is a question only an Illinois lawyer can answer, and soon, since the 90-day and 1-year periods can be short.

Remedies

A person who terminates or fails to renew a franchise in violation of the act is liable to the franchisee, who may sue for damages caused. A franchisee in whose favor judgment is entered is entitled to costs including reasonable attorney's fees, and controlling persons, officers and certain others are jointly and severally liable (section 26). Injunctive relief is not mentioned in section 26.

Forum and waivers

A franchise agreement provision designating jurisdiction or venue outside Illinois is void, though an agreement may provide for arbitration outside the state (815 ILCS 705/4). A provision purporting to bind a franchisee to waive compliance with the act or any other Illinois law is void (815 ILCS 705/41), though the statute does not prevent settlements, general releases of lawsuits, or arbitration under the Federal Arbitration Act. See forum-selection clauses.

Questions to look for in your own notice and agreement

What cure period, if any, does the notice give, and what date was it delivered?
Does it rely on a no-cure ground such as abandonment, a conviction or repeated noncompliance?
Is the franchised business located in Illinois, and was a franchise fee of $500 or more required?
For non-renewal, how many months before expiry was notice sent, and does the agreement bar a similar business nearby?
Does the agreement name a venue outside Illinois?
Has any written notice told you of a violation, starting the 90-day period?