If a developer defaults on the Development Agreement with Jersey Mike's, does this automatically constitute a default under any existing Franchise Agreements?

According to Jersey Mike's 2025 Franchise Disclosure Document, a default under the Development Agreement does not automatically trigger a default under any existing Franchise Agreements. However, there is an exception: if the specific default under the Development Agreement also constitutes a default under the terms of the Franchise Agreement, then it would be considered a default under the Franchise Agreement as well.

This means that while the Development Agreement and Franchise Agreements are treated as separate contracts, some overlapping terms could cause a breach in one to also be a breach in the other. For example, if the developer fails to maintain the brand standards outlined in both agreements, it could trigger a default in both.

For a prospective Jersey Mike's franchisee, this distinction is important. It clarifies that the performance of the Development Agreement is somewhat independent of the Franchise Agreements. However, it is crucial to understand the terms of both agreements to identify any potential overlaps that could lead to a default in the Franchise Agreement due to a breach of the Development Agreement.