Under what grounds can a Jack In The Box developer terminate the Development Agreement?
Jack_In_The_Box Franchise · 2025 FDDAnswer from 2025 FDD Document
- Item 17 of the Disclosure Document, "Renewal, Termination, Transfer, and Dispute Resolution," is supplemented by the following:
With respect to franchisees/licensees/developers governed by Minnesota law, we will comply with Minn. Stat. Sec. 80C.14, Subds. 3, 4, and 5 which require, except in certain specified cases, that a franchisee/licensee/developer be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice of non-renewal of the Franchise /
License / Development Agreement, and that consent to the transfer of the franchise/license/development not be unreasonably withheld.
Source: Item 22 — CONTRACTS (FDD page 94)
What This Means (2025 FDD)
Based on the 2025 Jack In The Box Franchise Disclosure Document, the grounds for a developer to terminate the Development Agreement are not explicitly detailed in the provided excerpts. However, the document includes amendments and addenda related to specific state laws (Illinois, Hawaii, California, New York, South Dakota, and Virginia) that address certain franchisee rights and franchisor obligations. These amendments primarily focus on compliance with state franchise laws, deferral of fees, and stipulations regarding governing law and dispute resolution.
Specifically, the Illinois Development Agreement Amendment states that rights upon termination and non-renewal of an agreement are set forth in sections 19 and 20 of the Illinois Franchise Disclosure Act. The Hawaii Development Agreement Amendment requires Jack In The Box to compensate the developer upon termination or refusal to renew the development rights for the fair market value of inventory, supplies, equipment, and furnishings purchased from Jack In The Box or a designated supplier. Additionally, if Jack In The Box refuses to renew development rights to convert the developer's business to one owned and operated by the company, compensation for the loss of goodwill is required.
In Minnesota, franchisees/licensees/developers must be given 90 days' notice of termination (with 60 days to cure) and 180 days' notice of non-renewal of the Franchise/License/Development Agreement, except in certain specified cases. Consent to the transfer of the franchise/license/development cannot be unreasonably withheld. These state-specific provisions suggest that termination rights and conditions can vary significantly depending on the location of the franchise.
To fully understand the conditions under which a Jack In The Box developer can terminate the Development Agreement, a prospective franchisee should carefully review the entire Development Agreement, including all state-specific addenda, and consult with a legal professional experienced in franchise law. It is essential to clarify the specific termination clauses, notice requirements, and any potential penalties or obligations that may arise from early termination.