Faulkenberg v. CB Tax Franchise Systems, LP

Dist. Ct. did not err in dismissing for lack of proper venue under Rule 12(b)(3), plaintiffs' lawsuit alleging common law fraud and violations of Ill. Franchise Disclosure Act arising out of plaintiffs' contract with defendants to operate five tax-preparation franchises where said contract contained clause requiring arbitration in Texas of all disputes with defendant, as well as clause requiring filing of any lawsuit in Texas state court if arbitration was unsuccessful. While Ill. Franchise Act voids all forum-selection clauses in franchise agreements, said Act specifically permits arbitration outside of Illinois, and thus plaintiffs should have submitted instant claim that they were fraudulently induced to sign franchise agreement to arbitrator. Fact that defendants had filed instant, venue-based motion to dismiss did not constitute waiver of their right to arbitration.