What are the conditions that must be met for the continuation of the franchise relationship after the death or permanent disability of a Controlling Principal of a Jersey Mikes franchise?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
This Section 19.8 applies only if (i) a Controlling Principal dies or becomes Permanently Disabled (def ined in Section 31), and (ii) the dea th or Permanent Disability results in a change in executive-level responsibility for managing the Franchised Restaurant.
- b.
Upon the occurrence of an event described in Section 19.8(a), a Principal of Franchisee shall notify Franchisor of the event and indicate Franchisee's intention of continuing to operate the Restaurant according to this Section 19.8(b).
D uring the first one hundred twenty (120) days after the death or Permanent Disability occurs, Franchisor will evaluate the interim management's willingness and ability to operate the Franchised Restaurant in compli ance with this Agree ment.
By the end of the one hundred twenty (120)-day evaluation period, Franchisor will decide whether the interim management is qualified to manage the Franchised Restaurant and become its Controlling Principal, and will notify Franchisee's known Principals of its decision.
As conditions to continuing the Franchise relationship, each Principal shall furnish Franchisor a signed G uaranty and Assumption of Obligations and any deficiency in Franchisee's compliance with the requirements of this Agreement shall be cured.
Further, Franchisor may require the new Controlling Principal or designated manager to attend and satisfactorily complete the Franchisor's initial training program.
- c.
If any of the c onditions stated i n Section 19.8(b) is not satisfied, or if Franchisor decides that the interim management has not adequately demonstrated its business qualifications or commitment to the franchise relationship, the surviving Principals will have one hundred twenty (120) days after delivery of Franchisor's notice to (i) locate a new Controlling Principal who is acceptable to Franchisor or (ii) sign a binding contract to sel l the Franchise or a Controlling Interest in the Franchise to a buyer approved by Franchisor in accordance with, and in a transaction structured to comply with, Section 19.2 or 19.4, whichever is applicable.
The proposed sale will be subject to Franchisor's right of first refusal under Section 19.7.
Source: Item 22 — CONTRACTS (FDD page 77)
What This Means (2025 FDD)
According to Jersey Mikes' 2025 Franchise Disclosure Document, the continuation of a franchise after the death or permanent disability of a Controlling Principal is subject to specific conditions. These conditions apply only if the death or permanent disability results in a change in executive-level responsibility for managing the franchised restaurant. Following such an event, a Principal of the franchisee must notify Jersey Mikes of the event and indicate their intention to continue operating the restaurant.
Jersey Mikes will then evaluate the interim management's willingness and ability to operate the franchised restaurant in compliance with the franchise agreement during a 120-day period. By the end of this evaluation, Jersey Mikes will decide whether the interim management is qualified to manage the restaurant and become its Controlling Principal, notifying the franchisee's known Principals of their decision. To continue the franchise relationship, each Principal must furnish Jersey Mikes with a signed Guaranty and Assumption of Obligations, and any deficiencies in the franchisee's compliance with the agreement must be resolved.
Furthermore, Jersey Mikes may require the new Controlling Principal or designated manager to attend and satisfactorily complete the initial training program. If any of these conditions are not met, or if Jersey Mikes decides that the interim management has not adequately demonstrated its business qualifications or commitment to the franchise relationship, the surviving Principals have 120 days after receiving notice from Jersey Mikes to either find a new Controlling Principal acceptable to Jersey Mikes or sign a binding contract to sell the franchise to a buyer approved by Jersey Mikes. This proposed sale is subject to Jersey Mikes' right of first refusal.