When a Jack In The Box franchise is terminated in Hawaii, what is Jack In The Box required to compensate the franchisee for?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
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- 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.
Source: Item 22 — CONTRACTS (FDD page 94)
What This Means (2025 FDD)
According to the 2025 Jack In The Box Franchise Disclosure Document, Hawaii state law requires Jack In The Box to compensate a franchisee if the franchise is terminated or not renewed. This compensation covers the fair market value of inventory, supplies, equipment, and furnishings at the time of termination or expiration. These items must have been purchased from Jack In The Box or a designated supplier. However, Jack In The Box is not required to compensate for personalized materials that have no value to the company.
In addition to the above, if Jack In The Box refuses to renew a franchise with the intention of converting it to a company-owned and operated business, they must also compensate the franchisee for the loss of goodwill. This acknowledges the value the franchisee built in the business's reputation and customer base.
Jack In The Box is allowed to deduct reasonable costs associated with removing, transporting, and disposing of the franchisee's inventory, supplies, equipment, and furnishings. They can also offset any money owed to them by the franchisee from the compensation amount. This ensures that any outstanding debts or expenses are accounted for during the termination process.