Does a default under the Jersey Mike's Development Agreement automatically constitute a default under any individual Franchise Agreement between the parties?

According to Jersey Mike's 2025 Franchise Disclosure Document, a default under the Development Agreement does not automatically constitute a default under any individual Franchise Agreement between the parties. However, there is an exception to this rule. If a default under the Development Agreement also constitutes a default under any Franchise Agreement in accordance with the terms outlined in the Franchise Agreement itself, then it would be considered a default under the Franchise Agreement.

This means that while the Development Agreement and Franchise Agreements are treated as separate contracts, certain breaches of the Development Agreement could trigger a default under the Franchise Agreement if the Franchise Agreement specifically incorporates those terms. This interrelation is something a prospective franchisee should carefully examine.

For a potential Jersey Mike's developer, this clause highlights the importance of understanding the interplay between the Development Agreement and the individual Franchise Agreements. While a misstep in the Development Agreement won't automatically jeopardize existing franchises, it could if the Franchise Agreement's terms are linked to compliance with the Development Agreement. It is important to review both agreements carefully with legal counsel to understand how they relate to each other.