To what extent is a Jack In The Box franchisee obligated to indemnify the franchisor?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
e franchises. No states have revoked or suspended the right to offer these franchises. The proposed registration of these franchises has not been involuntarily withdrawn in any state.
- Item 21 "Financial Statements" is amended by adding the following paragraph:
Attached at the end of Exhibit P to the FDD and incorporated into this Hawaii Addendum to the Franchise Disclosure Document are the unaudited financial statements for our parent, Jack in the Box SPV Guarantor, LLC and Subsidiaries, as of January 21, 2024.
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- No statement, questionnaire or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- To the extent this Addendum is deemed to be inconsistent with the Disclosure Document, the terms of this Addendum shall govern.
HAWAII FRANCHISE AGREEMENT AMENDMENT
In recognition of the requirements of Hawaii Franchise Investment Law, Hawaii Rev. Stat. §§ 482E, et seq., the parties to the attached JACK IN THE BOX FRANCHISE AGREEMENT (the "Agreement") agree as follows:
- The following is added to the end of Section 2. of the Agreement:
Notwithstanding the foregoing, in the State of Hawaii, Company will defer the payment of the Franchise Fee until all of the Company's pre-opening obligations to Franchisee have been satisfied and the Franchised Restaurant opens for business. Upon the opening of the Franchised Restaurant, Franchisee shall pay to Company the Franchise Fee.
- The following sentence is added to the end of Section 14E, under the heading "Assignment of the Franchise":
The general release requirement in subsection (iv) above excludes only such claims as Franchisee may have under the Hawaii Franchise Investment Law.
- The following sentence is added to the end of Section 16E, under the heading "Right of First Refusal":
The general release requirement in this subsection excludes only such claims as Franchisee may have under the Hawaii Franchise Investment Law.
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- The following new Section 18J is added, under the heading "Termination":
- J. Notwithstanding anything to the contrary in this Section 18, Company shall comply with Hawaii law which currently requires that Company compensate Franchisee upon termination or refusal to renew the franchise for the fair market value, at the time of the termination or expiration of the franchise, of any inventory, supplies, equipment and furnishings which were purchased from Company or a supplier designated by Company. Personalized materials which have no value to Company need not be compensated for. If Company refuses to renew a franchise for the purpose of converting Franchisee's business to one owned and operated by Company, Company, in addition, must compensate Franchisee for the loss of goodwill. Company may deduct reasonable costs incurred in removing, transporting and disposing of Franchisee's inventory, supplies, equipment and furnishings pursuant to these requirements, and may offset any moneys due Company.
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- No statement, questionnaire or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including
fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- To the extent this Amendment is deemed to be inconsistent with any terms or conditions of the Agreement, the terms of this Amendment shall govern.
DIFFERENT RULES, LLC
HAWAII LICENSE AGREEMENT AMENDMENT
In recognition of the requirements of Hawaii Franchise Investment Law, Hawaii Rev. Stat. §§ 482E, et seq., the parties to the attached JACK IN THE BOX LICENSE AGREEMENT (the "Agreement") agree as follows:
- The following is added to the end of Section 2 of the Agreement:
Notwithstanding the foregoing, in the State of Hawaii, Company will defer payment of the Franchise Fee until all of the Company's preopening obligations to Licensee have been satisfied and the Licensed Restaurant opens for business. Upon the opening of the Licensed Restaurant, Licensee shall pay to Company the Franchise Fee.
- The following sentence is added to the end of Section 14, under the heading "Assignment by Licensee":
The general release requirement in subsection (iv) above excludes only such claims as Licensee may have under the Hawaii Franchise Investment Law.
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- The following new Section 15H is added, under the heading "Termination":
- H. Notwithstanding anything to the contrary in this Section 15, Company shall comply with Hawaii law which currently requires that Company compensate Licensee upon termination or refusal to renew the franchise for the fair market value, at the time of the termination or expiration of the franchise, of any inventory, supplies, equipment and furnishings which were purchased from Company or a supplier designated by Company. Personalized materials which have no value to Company need not be compensated for. If Company refuses to renew a franchise for the purpose of converting Licensee's business to one owned and operated by Company, Company, in addition, must compensate Licensee for the loss of goodwill. Company may deduct reasonable costs incurred in removing, transporting and disposing of Licensee's inventory, supplies, equipment and furnishings pursuant to these requirements, and may offset any moneys due Company.
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- No statement, questionnaire or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- To the extent this Amendment is deemed to be inconsistent with any terms or conditions of the Agreement, the terms of this Amendment shall govern.
DIFFERENT RULES, LLC LICENSEE
HAWAII DEVELOPMENT AGREEMENT AMENDMENT (SINGLE UNIT)
In recognition of the requirements of Hawaii Franchise Investment Law, Hawaii Rev. Stat. §§ 482E, et seq., the parties to the attached JACK IN THE BOX DEVELOPMENT AGREEMENT (the "Agreement") agree as follows:
- The following is added to the end of Section 5 of the Agreement:
Notwithstanding the foregoing, in the State of Hawaii, Company will defer the payment of the Development Fee until all of the Company's pre-opening obligations to Developer have been satisfied and the Franchised Restaurant that you develop under this Agreement opens for business. Upon the opening of the Franchised Restaurant, Developer shall pay to Company the Development Fee.
- The following sentence is added to the end of Section 11D, under the heading "Non-Assignability":
The general release requirement in subsection (iii) above excludes only such claims as Developer may have under the Hawaii Franchise Investment Law.
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- The following new Section 16D is added:
- D. Notwithstanding anything to the contrary in this Section 16, Company shall comply with Hawaii law which currently requires that Company compensate Developer upon termination or refusal to renew the development rights for the fair market value, at the time of the termination or expiration of the development rights, of any inventory, supplies, equipment and furnishings which were purchased from Company or a supplier designated by Company. Personalized materials which have no value to Company need not be compensated for. If Company refuses to renew development rights for the purpose of converting Developer's business to one owned and operated by Company, Company, in addition, must compensate Developer for the loss of goodwill. Company may deduct reasonable costs incurred in removing, transporting and disposing of Developer's inventory, supplies, equipment and furnishings pursuant to these requirements, and may offset any moneys due Company.
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- No statement, questionnaire or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
- To the extent this Amendment is deemed to be inconsistent with any terms or conditions of the Agreement, the terms of this Amendment shall govern.
DIFFERENT RULES, LLC DEVELOPER
HAWAII DEVELOPMENT AGREEMENT AMENDMENT (MULTI-UNIT)
In recognition of the requirements of Hawaii Franchise Investment Law, Hawaii Rev. Stat. §§ 482E, et seq., the parties to the attached JACK IN THE BOX DEVELOPMENT AGREEMENT (the "Agreement") agree as follows:
- The following is added to the end of Section 5 of the Agreement:
Notwithstanding the foregoing, in the State of Hawaii, Company will defer the payment of the Development Fee until each Franchised Restaurant that you develop under this Agreement opens for business. Upon the opening of each Franchised Restaurant, Developer shall pay to Company a prorated amount of the total Development Fee, based on the number of restaurants to be opened under the Development Agreement.
- The following sentence is added to the end of Section 11D, under the heading "Non-Assignability":
The general release requirement in subsection (iii) above excludes only such claims as Developer may have under the Hawaii Franchise Investment Law.
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- The following new Section 16D is added:
- D. Notwithstanding anything to the contrary in this Section 16, Company shall comply with Hawaii law which currently requires that Company compensate Developer upon termination or refusal to renew the development rights for the fair market value, at the time of the termination or expiration of the development rights, of any inventory, supplies, equipment and furnishings which were purchased from Company or a supplier designated by Company. Personalized materials which have no value to Company need not be compensated for. If Company refuses to renew development rights for the purpose of converting Developer's business to one owned and operated by Company, Company, in addition, must compensate Developer for the loss of goodwill. Company may deduct reasonable costs incurred in removing, transporting and disposing of Developer's inventory, supplies, equipment and furnishings pursuant to these requirements, and may offset any moneys due Company.
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- No statement, questionnaire or acknowledgment signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on any statement made by any franchisor, franchise seller, or other person acting on behalf of the franchisor. This provision
supersedes any other term of any document executed in connection with the franchise.
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- To the extent this Amendment is deemed to be inconsistent with any terms or conditions of the Agreement, the terms of this Amendment shall govern.
DIFFERENT RULES, LLC DEVELOPER
ILLINOIS DISCLOSURE ADDENDUM
In recognition of the requirements of the Illinois Franchise Disclosure Act of 1987, Illinois Complied Statutes sections 705/4 and 705/41 ("the Act"), the JACK IN THE BOX DISCLOSURE DOCUMENT for use in the State of Illinois is amended to include the following:
- The following paragraph is added at the end of Item 5:
Payment of Initial Franchise/Development Fees will be deferred until Franchisor has met its initial obligations to franchisee, and franchisee has commenced doing business. This financial assurance requirement was imposed by the Office of the Illinois Attorney General due to Franchisor's financial condition.
- Item 21 "Financial Statements" is amended by adding the following paragraph:
Attached at the end of Exhibit P to the FDD and incorporated into this Illinois Addendum to the Franchise Disclosure Document are the unaudited financial statements for our parent, Jack in the Box SPV Guarantor, LLC and Subsidiaries, as of January 21, 2024
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- Illinois law governs the Franchise, License and Development Agreements.
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- In conformance with Section 4 of the Illinois Franchise Disclosure Act, any provision in a franchise agreement that designates jurisdiction and venue in a forum outside of the State of Illinois is void. However, a franchise agreement may provide for arbitration to take place outside of Illinois.
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- Your rights upon Termination and Non-Renewal of an agreement are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act.
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- In conformance with section 41 of the Illinois Franchise Disclosure Act, any condition, stipulation or provision purporting to bind any person acquiring any franchise to waive compliance with the Illinois Franchise Disclosure Act or any other law of Illinois is void.
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- No statement, questionnaire or acknowledgement signed or agreed to by a franchisee in connection with the commencement of the franchise relationship shall have the effect of: (i) waiving any claims under any applicable state franchise law, including fraud in the inducement, or (ii) disclaiming reliance on behalf of the Franchisor. This provision supersedes any other term of any document executed in connection with the franchise.
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- To the extent this Addendum is deemed to be inconsistent with the Disclosure Document, the terms of this Addendum shall govern.
ILLINOIS FRANCHISE AGREEMENT AMENDMENT
To comply with the requirements of the Illinois Franchise Disclosure Act (Ill. Comp. Stat.
Source: Item 22 — CONTRACTS (FDD page 94)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the extent to which a Jack In The Box franchisee is obligated to indemnify the franchisor is not explicitly detailed in the provided excerpts. However, the FDD includes addenda for several states (California, Hawaii, North Dakota, Rhode Island, Minnesota, and Illinois) that address franchisee rights and waivers, particularly concerning claims against Jack In The Box. These addenda generally state that no agreement signed by the franchisee can waive claims under state franchise laws, including fraud in the inducement, or disclaim reliance on statements made by Jack In The Box. This suggests that while general indemnity clauses might exist, they are limited by state laws protecting franchisees. The financial statements for Jack in the Box SPV Guarantor, LLC and Subsidiaries, as of January 21, 2024, are attached at the end of Exhibit P to the FDD and incorporated into the addenda for Hawaii and Minnesota.
In several states, specific provisions are added to the franchise agreement to protect franchisees. For example, Minnesota Rules prohibit Jack In The Box from requiring a franchisee to assent to a general release, and the franchisee cannot consent to the franchisor obtaining injunctive relief. Similarly, Illinois law states that any provision designating jurisdiction and venue outside of Illinois is void, although arbitration outside of Illinois may be allowed. These state-specific amendments indicate a careful balance between the franchisor's need for indemnity and the franchisee's rights under state laws.
Prospective Jack In The Box franchisees should be aware of these state-specific addenda and how they modify the standard franchise agreement. It is crucial to understand which provisions of the agreement are superseded by state law and to seek legal counsel to fully understand their rights and obligations. Franchisees should also inquire about any specific indemnity clauses in the franchise agreement and how they are affected by the laws of their state. Understanding these nuances is essential for making an informed investment decision and protecting their interests as a franchisee.