In South Dakota, when does a Jack In The Box franchisee have to pay the franchise fee?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
In recognition of the requirements of the South Dakota Codified Laws, §37-5B-5, 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 South Dakota, Company will defer the payment of the Franchise Fee until the Franchised Restaurant opens for business. Upon the opening of the Franchised Restaurant, Franchisee shall pay to Company the Franchise Fee.
- 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.
Source: Item 22 — CONTRACTS (FDD page 94)
What This Means (2025 FDD)
According to the 2025 Jack In The Box Franchise Disclosure Document, in the state of South Dakota, the payment of the franchise fee is deferred until the franchised restaurant opens for business. Upon the opening of the restaurant, the franchisee is required to pay the franchise fee. This amendment is made in recognition of the requirements of the South Dakota Codified Laws, §37-5B-5. This applies to the JACK IN THE BOX FRANCHISE AGREEMENT.
This deferred payment structure is favorable for franchisees in South Dakota as it reduces the initial financial burden. Instead of paying the franchise fee upfront, franchisees can allocate those funds to other startup costs, such as construction, equipment, and initial marketing efforts. This can significantly improve a franchisee's cash flow during the critical early stages of operation.
It's important to note that this amendment specifically applies to franchise agreements within South Dakota and is intended to comply with South Dakota law. The amendment also states that if there are any inconsistencies between the amendment and the original agreement, the terms of the amendment will take precedence. This ensures that franchisees in South Dakota are protected by the specific provisions of their state's laws regarding franchise fee payments.