Does Jack In The Box have the right to approve transfers of the Franchise Agreement by the franchisee?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Development Agreement | Summary | |
|---|---|---|---|
| g. | “Cause” defined - defaults which can be cured | § 16 (Single Unit) § 16 (Multi-Unit) | Default under Development Schedule, failure to obtain expansion approval or site approval before beginning site development, assignment without consent, involuntary bankruptcy filing, failure to obtain permits, breach of a franchise agreement or other agreement with the Company. |
| h. | “Cause” defined - defaults which cannot be cured | § 16 (Single Unit) § 16 (Multi-Unit) | Voluntary bankruptcy and other insolvency. |
| i. | Your obligations on termination/nonrenewal | § 16 (Single Unit) § 16 (Multi-Unit) | Cease establishing restaurants, cease operating any restaurant for which a Franchise Agreement has not been executed, payment of amounts due, compliance with covenants. |
| j. | Assignment of contract by the Company | § 11.E (Single Unit) § 11.E (Multi- Unit) | There are no limits on our assignment rights. |
| k. | “Transfer” by you - defined | § 11 (Single Unit) § 11 (Multi-Unit) | Includes transfer of any interest in Development Agreement, Developer, or all or substantially all of the Developer’s business. |
| l. | The Company’s approval of transfer by you | § 11.B (Single Unit) § 11.B (Multi- Unit) | We have the right to approve transfers. |
| m. | Conditions for the Company’s approval of transfer | § 11.D (Single Unit) § 11.D (Multi- Unit) | No default, execution of new Development Agreement, a General Release of the Company, and any applicable personal guarantees, payment of transfer fee, and others; see § 8.D. The general release is subject to restrictions in applicable state law. |
| n. | The Company’s right of first refusal to acquire your business | Not Applicable | |
| Provision | Section in Nontraditional License Agreement | Summary agreement is intended to disclaim the express representations made in this disclosure document, its exhibits, and amendments. | |
| u. | Dispute resolution by arbitration or mediation | Not Applicable | |
| v. | Choice of forum | § 18.B | Subject to applicable state law, state courts located in San Diego, California; federal courts located in the Southern District of California. You and the Company waive trial by jury in any action brought against each other. |
| w. | Choice of law | § 18.B | Subject to applicable state law, California law controls. You and the Company must bring any action against each other within two (2) years of the occurrence of the facts on which the action is based, or within a shorter term if required by law. |
| Provision | Section in Franchise Agreement | Summary | |
| j. | Assignment of contract by the Company | § 14.F | There are no limits on our assignment rights. |
| k. | "Transfer" by you - definition | § 14 | Includes any sale, assignment, pledge, mortgage, hypothecation, gift, or encumbrance of any direct or indirect interest in the Franchise Agreement, the franchisee, the Franchised Restaurant, or the Franchised Location. |
| I. | Our approval of transfer by you | § 14.A and § 14.C | We have the right to approve transfers. |
| m. | Conditions for the Company's approval of transfer | § 14.E | Completion of Certification of Entity Structure Form, payment of transfer fee, execution of a General Release of the Company, payment of all monies owed, material defaults corrected, personal guarantees signed, training completed, assignment agreement or new franchise agreement on then- current form, and any other conditions. The general release is subject to restrictions in applicable state law. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 70–81)
What This Means (2025 FDD)
According to the 2025 Jack In The Box Franchise Disclosure Document, Jack In The Box retains the right to approve any transfers of the franchise agreement by the franchisee. This stipulation is detailed within Item 17, which outlines the terms related to renewal, termination, transfer, and dispute resolution. Specifically, Section 14.A and 14.C of the Franchise Agreement state that Jack In The Box has the right to approve transfers.
This provision means that if a franchisee wishes to sell their Jack In The Box restaurant or transfer their interest in the franchise, they must first obtain approval from Jack In The Box. This is a common practice in franchising, allowing the franchisor to maintain control over who joins their system and to ensure that new franchisees meet their standards.
The FDD also lists conditions for Jack In The Box's approval of a transfer. These conditions include completing a Certification of Entity Structure Form, paying a transfer fee, executing a General Release of the Company, ensuring all monies owed are paid, correcting any material defaults, securing personal guarantees, completing training, and executing an assignment agreement or a new franchise agreement on the then-current form. These conditions are designed to protect the Jack In The Box brand and ensure that any new franchisee is fully qualified and committed to operating the franchise successfully. The general release mentioned is subject to restrictions in applicable state law, which means the specifics can vary depending on where the franchise is located.