Is JMFS a party to any Franchise Agreement with Jersey Mikes franchisees?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
WHEREAS, Franchisee shall be a participant in the Coach Rod Smith Program (the "Coach Rod Smith Program") offered by Franchisor's affiliate, Jersey Mike's Franchise Systems, LLC, a Delaware limited liability company ("JMFS"), in which qualified managers of J ersey Mike's restaurants are given the opportunity to develop a Jersey Mike's restaurant pursuant to certain terms and conditions; and
WHEREAS, Franchisor and Franchisee wish to amend the terms of the Franchise Agreement to reflect the terms and conditions of the Coach Rod Smith Program.
NOW, THEREFORE, the parties, in consideration of the undertakings and commitments of each party to the other, hereby agree as follows:
Source: Item 21 — FINANCIAL STATEMENTS (FDD pages 76–77)
What This Means (2025 FDD)
According to the 2025 Jersey Mike's Franchise Disclosure Document, Jersey Mike's Franchise Systems, LLC ("JMFS") is not directly a party to the standard Franchise Agreement with franchisees. However, JMFS is involved in several aspects of the franchise relationship. Specifically, Jersey Mike's franchisees participating in the Coach Rod Smith Program may have agreements amended to reflect the program's terms, and these amendments may involve promissory notes with JMFS. Additionally, JMFS may provide services to franchisees, and franchisees may be required to utilize JMFS's resources for accounting, bookkeeping, or lease review, incurring associated costs. JMFS also used to offer Area Director Agreements but no longer does. These agreements allowed individuals to solicit prospective franchisees.
JMFS's role extends to financing as well. Franchisees may obtain financing through JMFS, with the franchisee's principals personally guaranteeing the promissory note. JMFS also holds a security interest in the assets of the Jersey Mike's restaurant, allowing them to foreclose on those assets if payments are not made. Furthermore, franchisees may be required to waive certain notices of collection action in JMFS's promissory note and guaranty. JMFS has the right to sell or assign the promissory note to a third party.
Moreover, Jersey Mike's franchisees are required to procure insurance policies that protect Jersey Mike's, the franchisor, and JMFS, naming both the franchisor and JMFS as additional insureds. This insurance must cover potential losses, liabilities, personal injury, death, property damage, or expenses related to the franchised restaurant. This demonstrates that while JMFS may not be a direct party to the Franchise Agreement, it has significant contractual and financial relationships with Jersey Mike's franchisees, impacting their operational and financial obligations.
In 2019, JMFS transferred all existing Franchise Agreements and Area Development Agreements to the Company. However, JMFS continues to provide franchise, marketing, development, intellectual property, technology, and operational and reporting services on behalf of the Company under a management agreement. This indicates that while the formal agreements may be held by the Company, JMFS plays a crucial role in the ongoing management and support of the Jersey Mike's franchise system.