Does Jack In The Box take a security interest in the business assets of the restaurant?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
The Franchise Agreement gives us a first-priority security interest in the business assets of your Jack in the Box restaurant in order to secure payment of all amounts that you may owe to us under the Franchise Agreement and any other agreements you may have with us. Granting us a security interest in these assets may impair your ability to obtain financing from other potential lenders. In order to facilitate your efforts to obtain financing, we may agree to subordinate our security interest to the security interest of another lender, but only under certain conditions.
Source: Item 10 — FINANCING (FDD pages 49–50)
What This Means (2025 FDD)
According to the 2025 Jack In The Box Franchise Disclosure Document, Jack In The Box does take a security interest in the business assets of your restaurant. The Franchise Agreement grants Jack In The Box a first-priority security interest in the business assets of your Jack In The Box restaurant. This security interest serves to secure the payment of all amounts that you may owe to them under the Franchise Agreement and any other agreements you may have with them.
This security interest could impact a franchisee's ability to obtain financing from other lenders. Because Jack In The Box has first priority, other lenders may be less willing to provide financing, or may offer less favorable terms. However, Jack In The Box may agree to subordinate their security interest to another lender under certain conditions, which could help a franchisee secure financing.
It is important for prospective franchisees to fully understand the implications of this security interest and to discuss financing options with Jack In The Box and potential lenders. Understanding the conditions under which Jack In The Box might subordinate its security interest is also crucial for planning future financing needs.