What constitutes a 'transfer' by the developer under the Jack In The Box Development Agreement?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| g. | "Cause" defined - defaults which can be cured | § 16 (Single Unit) § 16 (Multi-Unit) | Default under Development Schedule, failure to obtain expansion approval or site approval before beginning site development, assignment without consent, involuntary bankruptcy filing, failure to obtain permits, breach of a franchise agreement or other agreement with the Company. |
| h. | "Cause" defined - defaults which cannot be cured | § 16 (Single Unit) § 16 (Multi-Unit) | Voluntary bankruptcy and other insolvency. |
| i. | Your obligations on termination/nonrenewal | § 16 (Single Unit) § 16 (Multi-Unit) | Cease establishing restaurants, cease operating any restaurant for which a Franchise Agreement has not been executed, payment of amounts due, compliance with covenants. |
| j. | Assignment of contract by the Company | § 11.E (Single Unit) § 11.E (Multi Unit) | There are no limits on our assignment rights. |
| k. | "Transfer" by you - defined | § 11 (Single Unit) § 11 (Multi-Unit) | Includes transfer of any interest in Development Agreement, Developer, or all or substantially all of the Developer's business. |
| l. | The Company's approval of transfer by you | § 11.B (Single Unit) § 11.B (Multi Unit) | We have the right to approve transfers. |
| m. | Conditions for the Company's approval of transfer | § 11.D (Single Unit) § 11.D (Multi Unit) | No default, execution of new Development Agreement, a General Release of the Company, and any applicable personal guarantees, payment of transfer fee, and others; see § 8.D. The general release is subject to restrictions in applicable state law. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 70–81)
What This Means (2025 FDD)
According to Jack In The Box's 2025 Franchise Disclosure Document, a 'transfer' by the developer encompasses a broad range of transactions related to the Development Agreement, the developer entity itself, or the developer's business operations. Specifically, it includes the transfer of any interest in the Development Agreement, the developer entity, or all or substantially all of the developer's business. This definition is important for prospective developers to understand, as any action falling under this definition will be subject to Jack In The Box's approval and other conditions outlined in the Development Agreement.
This broad definition of 'transfer' gives Jack In The Box significant control over who can be involved in developing Jack In The Box restaurants within the designated territory. It ensures that any change in ownership or control of the development rights is subject to their scrutiny and approval. This protects Jack In The Box's interests by allowing them to maintain consistent standards and practices across all of its developments.
For a prospective Jack In The Box developer, this means that any plan to sell the development rights, bring in a new partner, or even sell a significant portion of the business will require the franchisor's consent. The franchisor has the right to approve these transfers, and there are conditions that must be met for the company's approval of transfer, including no default, execution of a new Development Agreement, a General Release of the Company, and any applicable personal guarantees, payment of transfer fee, and others. This could involve significant legal and administrative work, as well as potential transfer fees, so it's crucial to factor these considerations into any long-term business plan.