For a Jack In The Box developer, what is the meaning of 'Development Rights' as defined in the agreement?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
Agreement, the parties now desire to enter into this Agreement upon the terms and provisions set forth below.
- 2. DEFINITIONS OF TERMS. As used in this Agreement, the following terms shall have the meanings defined in this Section unless a different meaning is plainly required by the context:
- A. "Affiliates" shall include people, partnerships, corporations or other legal entities that directly or indirectly own or control Developer or Company, and partnerships, corporations or other legal entities that are directly or indirectly owned or controlled by Developer or Company, and all officers, directors, agents and employees of Developer or Company.
- B. "Compliance Date(s)" shall mean the dates described on Exhibit A, attached hereto and incorporated herein by this reference.
- C. "Development Rights" shall mean the right to construct one or more Jack in the Box restaurants within the Development Area and enter into "Franchise Agreement(s)" (as defined below) to operate such restaurants, subject to the terms and conditions of this Agreement.
- D. "Development Area" shall mean the area described on Exhibit B, attached hereto and incorporated herein by this reference.
- E. "Developed Restaurant(s)" shall mean the Jack in the Box restaurants to be developed pursuant to this Agreement.
- F. "Effective Date" shall mean the date upon which Company signs this Agreement.
- G. "Fast Food Restaurant" shall mean a restaurant offering prompt service from a limited menu and selling food and beverage products for consumption at or from the premises of the restaurants.
- H. "Owner(s)" shall mean the owner(s) of Developer if Developer is or becomes (through an approved assignment under Section 11 below) a partnership, limited liability company or corporation, and shall include all shareholders, general or limited partners, or members of such entity.
3. GRANT OF RIGHTS.
A. In reliance upon the commitments made by Developer in this Agreement, Company grants to Developer the Development Rights, subject to the terms and conditions of this Agreement and the Franchise Agreement which must be entered into for the restaurant pursuant to Section 9 hereof. Until such time as this Agreement expires or is terminated, Company will not grant new Jack in the Box franchises to any person or entity other than Developer for the operation of, nor will Company open, any new Jack in the Box restaurant within the Development Area; however, if Company or any other franchisee already operates one or more Jack in the Box restaurants within the Development Area, Company shall have the right to: (i) continue to operate (and allow franchisees to operate) any such currently existing locations; (ii) grant a franchise for the operation of those restaurants to a franchisee other than Developer; or (iii) develop and open, or allow a franchisee to develop and open, an offset restaurant to replace any such existing location(s).
Source: Item 23 — RECEIPT (FDD pages 94–634)
What This Means (2025 FDD)
According to Jack In The Box's 2025 Franchise Disclosure Document, 'Development Rights' refer to the right granted to a developer to construct one or more Jack In The Box restaurants within a specific Development Area. This right is accompanied by the ability to enter into Franchise Agreements to operate these restaurants, all of which are subject to the terms and conditions outlined in the Development Agreement. The Development Area is specifically detailed in Exhibit B of the agreement.
Jack In The Box grants these Development Rights in reliance on the commitments made by the developer within the agreement. Until the agreement expires or is terminated, Jack In The Box commits not to grant new franchises to other parties or open new restaurants within the designated Development Area. However, this exclusivity is subject to certain exceptions. If Jack In The Box or another franchisee already operates restaurants within the Development Area, they retain the right to continue operating those locations, grant franchises for those restaurants to someone other than the developer, or develop an offset restaurant to replace existing locations.
It's important to note that the Development Agreement itself does not grant the developer the right to use the Jack In The Box system or marks. These rights can only be acquired through separate Franchise Agreements entered into with Jack In The Box. In consideration for these Development Rights, the developer must pay Jack In The Box a development fee of $50,000, which is nonrefundable and considered fully earned by Jack In The Box upon payment. This fee, however, can be credited against the franchise fee required under the Franchise Agreement for each Developed Restaurant.
Failure to meet the obligations under the Development Agreement, such as not opening a Developed Restaurant by the Compliance Date, failing to obtain necessary approvals, or assigning the agreement without consent, can lead to termination of the agreement and the Development Rights. Termination does not relieve the developer of obligations to pay sums owed to Jack In The Box. The term of the Development Agreement commences on the Effective Date and expires on the Compliance Date.