Does Jersey Mike's reserve the right to place company-owned or franchised restaurants in non-traditional venues within a franchisee's Designated Area?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
Under the Franchise Agreement, you are granted the right to operate a JERSEY MIKE'S Restaurant at a specific location ("Designated Area") described in the Franchise Agreement. Company and its affiliates will not, as long as the Franchise Agreement is in effect and you are not in default, enfranchise or operate a Company-owned or franchised JERSEY MIKE'S Restaurant, within your Designated Area as assigned in the Franchise Agreement, with the following exception: Company reserves the right to place company-owned or franchised Restaurants at "non-traditional venues," such as a irports, casinos, arenas, hospitals, hotels, malls, military installations, national parks, schools, stadiums and theme parks, within your Designated Area. Company may also acquire or be sold to a competing franchise system, which may or may not include restaurants in your Designated Area.
Source: Item 12 — TERRITORY (FDD pages 51–53)
What This Means (2025 FDD)
According to Jersey Mike's 2025 Franchise Disclosure Document, Jersey Mike's retains the right to establish company-owned or franchised restaurants in non-traditional venues, even within a franchisee's designated area. These non-traditional venues include locations such as airports, casinos, arenas, hospitals, hotels, malls, military installations, national parks, schools, stadiums, and theme parks. This means that while a franchisee is granted a designated area, Jersey Mike's can still open additional locations within that area if they are in one of these specified non-traditional venues.
This reservation of rights has significant implications for prospective franchisees. It means that a franchisee's territorial protection is limited, and they could face competition from other Jersey Mike's locations within their designated area. This is particularly important to consider when evaluating the potential revenue and profitability of a specific location. While the franchisee is protected from traditional Jersey Mike's restaurants, these non-traditional venues could draw customers away from the franchised location.
It is common for franchise agreements to include some form of territorial protection, but the extent of that protection can vary widely. Some franchisors offer exclusive territories, while others, like Jersey Mike's, reserve the right to operate in certain venues or through alternative channels of distribution. Prospective franchisees should carefully review the territory provisions in the Franchise Agreement and consider how these reservations of rights could impact their business. Understanding the potential for competition from both company-owned and franchised locations in non-traditional venues is crucial for making an informed investment decision.
Furthermore, Jersey Mike's also retains the right to use other channels of distribution, such as the internet, inside a franchisee's territory. They are not required to compensate the franchisee if they solicit or accept orders inside the Designated Area through these other channels. All rights not expressly granted to the franchisee in the Franchise Agreement are reserved to Jersey Mike's and its affiliates.