To what extent are transfer fees collectable by Jack In The Box?

Based on the 2025 Jack In The Box Franchise Disclosure Document, the ability of Jack In The Box to collect transfer fees is subject to certain state-specific regulations. For instance, in North Dakota, the franchise agreement amendment stipulates that franchisees cannot be required to execute a general release of claims as a condition of the transfer of a franchise. This means Jack In The Box cannot mandate a franchisee to waive their rights to potential claims against the company as a prerequisite for approving a franchise transfer. Similarly, in Minnesota, franchisees are protected from being required to assent to a general release, which affects the conditions under which a transfer can occur. These regulations aim to protect franchisees from potentially unfair or overreaching demands by the franchisor during the transfer process.

In California, the Department has determined that Jack In The Box has not demonstrated adequate capitalization and/or must rely on franchise fees to fund operations. As a result, the Commissioner has imposed a fee deferral condition, which requires that Jack In The Box defers the collection of all initial fees from California franchisees until all pre-opening obligations have been completed and the franchisee is open for business. For California franchisees who sign a development agreement, the payment of the development and initial fees attributable to a specific unit in the development schedule is deferred until that unit is open. This deferral directly impacts the timing of when Jack In The Box can collect initial and development fees, linking it to the actual operational status of the franchise unit.

These state-specific amendments highlight the importance of franchisees understanding the regulatory landscape in their particular state. The amendments ensure that certain franchisee rights are protected during franchise transfers, and that the collection of fees is aligned with the progress of the franchise setup and operation. Prospective franchisees should carefully review the addenda applicable to their state and consult with legal counsel to fully understand their rights and obligations regarding franchise transfers and fee payments.