Can the Jack In The Box franchisor assign the Franchise Agreement at any time?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
- B. Any purported Transfer contrary to the provisions of this Agreement shall constitute a default under this Agreement and shall for purposes of any agreements with the Company, and to the extent permitted by law, be void and of no force or effect.
- C. Subject to the prior written consent of Company, Franchisee may assign this Agreement to a partnership, corporation or other legally formed entity other than a trust that is not then or thereafter to be engaged in any business other than operation of the Franchised Restaurant, and in which Owners of Franchisee shall own one hundred percent (100%) of the outstanding ownership interest in the same proportions as their respective interests in Franchisee prior to such assignment. Any such assignment shall not relieve any Owner of personal liability for performance of all obligations under this Agreement. No subsequent transfer in such assignee shall be made without Company's prior written approval. If Franchisee is not an individual, the Franchise Operator shall, throughout the term of this Agreement, maintain the required percentage ownership of the Franchisee.
The Articles of Incorporation, By-Laws, and other similar documents of Franchisee, copies of which shall be provided to Company upon Company's request, shall at all times reflect the restrictions contained in this Agreement, unless otherwise directed by Company. All stock certificates, membership certificates or other evidence of ownership shall bear on their face the following legend restricting transfer:
"Ownership of this certificate and the shares / membership interests evidenced thereby may be sold, assigned, transferred, pledged, hypothecated or otherwise alienated only under and subject to one or more JACK IN THE BOX restaurant Franchise Agreements, copies of which may be obtained from Different Rules, LLC, 9357 Spectrum Center Blvd, San Diego, California 92123."
Source: Item 23 — RECEIPT (FDD pages 94–634)
What This Means (2025 FDD)
Based on the 2025 Franchise Disclosure Document, the Jack In The Box franchise agreement outlines specific conditions regarding the transfer or assignment of the agreement. While the document does not explicitly state that Jack In The Box can assign the Franchise Agreement at any time, it does address the franchisee's ability to assign the agreement under certain conditions.
Specifically, a franchisee may assign the agreement to a legally formed entity such as a partnership or corporation, provided that the entity is solely engaged in operating the franchised restaurant. Additionally, the owners of the franchisee must maintain 100% ownership of the new entity in the same proportions as their original interests. This assignment requires the prior written consent of Jack In The Box, and any owner remains personally liable for the obligations under the agreement, even after the assignment.
Furthermore, any transfer that doesn't comply with these provisions constitutes a default under the agreement and may be considered void. The document also stipulates that all ownership certificates must bear a legend restricting transfer, ensuring that any potential future owners are aware of the franchise agreement's conditions. These stipulations protect Jack In The Box's interests by ensuring that any transfer of ownership maintains the integrity and operational standards of the franchise.