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Docket No. 97704-Agenda 32-September 2004.

ERIC JENSEN, Appellee, v. QUIK INTERNATIONAL et al., Appellants.

Opinion filed November 18, 2004.

JUSTICE RARICK delivered the opinion of the court:

Plaintiff, Eric Jensen, sought to rescind a franchise agreementwith Quik International (Quik) pursuant to section 26 of the FranchiseDisclosure Act of 1987 (Act) (815 ILCS 705/5 (West 2002)) on thegrounds that Quik was not registered as a franchise with the IllinoisAttorney General's office, as required by sections 5 and 10 of the Act.Quik sought to stay the litigation in the circuit court of Cook Countyand compel arbitration of Jensen's claim pursuant to an arbitrationclause in the franchise agreement. The appellate court held thatbecause compliance with the registration requirement of the Act wasa condition precedent to an enforceable contract, the franchiseagreement was not binding on Jensen, and he was not required tosubmit his claim to arbitration. 345 Ill. App. 3d 713. For the followingreasons, we reverse the decisions of the circuit and appellate courtsand remand the cause to the circuit court for further proceedings notinconsistent with this opinion.

Jensen entered into a franchise agreement with Quik, a Nevadafranchisor, whereby Quik granted Jensen the right to operate afranchise in Illinois. The franchise agreement contained an arbitrationclause, which provided that:

"[A]ny controversy or claim arising out of or relating to thisAgreement or its breach, including without limitation, anyclaim that this Agreement or any of its parts are invalid,illegal or otherwise voidable or void, shall be submitted toarbitration ***."

Quik subsequently notified Jensen that it was in violation of theAct because its registration as a franchise with the Illinois AttorneyGeneral's office had expired at the time it entered into the franchiseagreement with Jensen. The notice also informed Jensen of his rightsunder the Act, including the right to sue for damages and/or rescissionof the franchise agreement.

Jensen filed a complaint against Quik, its president, and its chiefexecutive officer, seeking damages and rescission of the franchiseagreement. Count I alleged that Quik had violated sections 5 and 10of the Act by failing to register as a franchise in Illinois. Count IIalleged that Quik violated section 6 of the Act by making incompleteand misleading disclosures. Count III alleged a violation of theConsumer Fraud and Deceptive Business Practices Act (815 ILCS505/1 et seq. (West 2002)).

Quik filed a motion to stay the litigation pending arbitration, thenfiled an arbitration demand in Nevada pursuant to section 3 of theFederal Arbitration Act (FAA) (9 U.S.C.