Illinois Administrative Code › Title 14 - COMMERCE › Part 200 - FRANCHISE DISCLOSURE ACT › Subpart J - REGISTRATION OF SALESPERSONS › Appendix C - Escrow Forms › ILLUSTRATION A - Escrow Agreement

Current through Register Vol. 48, No. 28, July 12, 2024
Agreement, made this _____ day of ___________, _____, by
					 _____(name of franchisor)____, a _____(type of business entity)_____
					 organized____ under the laws of the State of _________(hereinafter referred to
					 as "Franchisor"),__ and_________________ hereinafter referred to as "BANK", as
					 Escrowee for the franchisees of Franchisor;
WHEREAS, Franchisor is desirous of establishing franchises
					 in the State of Illinois; and
WHEREAS, it is in the discretion of the Illinois Attorney
					 General as administrator of the Illinois Franchise Disclosure Act, to require
					 an escrow of the franchise fees; and
WHEREAS, in order to conform to the procedures for
					 arranging an escrow account, Franchisor desires to enter into an escrow
					 agreement with BANK, pursuant to which initial franchise fees are to be held in
					 escrow until Franchisor has met its initial obligations to its
					 franchisees.
NOW THEREFORE, with the foregoing recitals hereinafter
					 incorporated by reference and made a part hereof, it is agreed as
					 follows:
1. Franchisor shall deposit
				  with BANK initial franchise fees received from franchisees that are required to
				  be escrowed under the order of the Administrator, but BANK shall not be
				  responsible for insuring that any part or all moneys received by Franchisor
				  from each or any one franchisee are deposited with BANK.
2. Franchisor will supply BANK with the name
				  and address of each franchisee, together with the amount of the deposit which
				  represents moneys paid by each franchisee and BANK will maintain records
				  containing the same information.
3.
				  All moneys received by BANK from Franchisor shall be held by BANK as escrowee
				  for the exclusive purpose herein described and will be placed in a single
				  segregated account designated substantially as follows:
(Name of Bank)____, AS ESCROWEE FOR FRANCHISES
					 OF  __(Name of Franchisor)__ (hereinafter referred to as "Escrow
					 Account.")
4. BANK shall
				  accept such funds as Franchisor shall deliver to BANK, as escrowee, and BANK
				  shall acknowledge the receipt of funds from Franchisor; however, BANK shall not
				  be responsible for the accuracy of the information provided to it by
				  Franchisor.
5. Any funds deposited
				  hereunder in the Escrow Account shall be invested and kept invested by BANK, at
				  the option of the Franchisor, in instruments of its choosing, until they are to
				  be disbursed as provided in paragraph 6 hereof. All interest received and any
				  increment thereon shall be added to the funds so deposited in the Escrow
				  Account and shall be distributed as provided in paragraph 6.
6. BANK shall pay out funds, plus interest,
				  if any, from the Escrow Account upon the occurrence of one of the following
				  conditions:
(a) Upon receipt of a letter from
				  an officer of Franchisor directing BANK to pay out such funds to Franchisor,
				  accompanied by a written notice from the Administrator stating that he takes no
				  exception (hereinafter referred to as "No Exception Notice") to the release,
				  BANK shall pay part or all of the moneys held in escrow for the benefit of a
				  specified franchisee, plus interest, if any, to Franchisor.
(b) Upon written notice from the
				  Administrator BANK shall return part or all of the deposited franchise fee and
				  other funds, plus interest, if any, to a specified franchisee.
(c) BANK shall pay funds into court or
				  disburse or deliver them in accordance with any final order of any court of
				  competent jurisdiction.
BANK shall not be personally liable for any act taken or
					 omitted by it in good faith and in the exercise of its own best judgment. BANK
					 shall also be fully protected in relying upon any written notice, demand,
					 certificate or document which it in good faith believes to be genuine.