Can Jersey Mikes terminate the Area Development Agreement?
Jersey_Mikes Franchise · 2025 FDDAnswer from 2025 FDD Document
| Provision | Section in Area Development Agreement | Summary |
|---|---|---|
| k. Transfer by | Section 20 | Any voluntary or invo luntary transfer of r ights in the Area Development Agreement or the assets of or ownership interest in franchisee no matter how effected. |
| Franchisee – defined | ||
| 1. Franchisor approval of transfer by Franchisee | Section 8 | You only may Transfer your rights with Company's written approval in its sole and absolute discretion. |
| m. Conditions for Franchisor's approval of transfer | Section 8.2 | Approval conditions may include, but are not limited to: your being in full compliance with agreements with Company and affiliates; transferee signs Company's then current form of Area Development Agreement and Franchise Agreements and related agreements for each of your Restaurants for your unexpired term; transferee releases Company from liability for your representations to transferee; transferee's Principals guaranty transferee's obligations to Company; transferee successfully completes Company's Area Developer training program, if any; transferee applies for accep tance as a Jersey Mike's developer; transferee demonstrates that it has the skills, qualifications, ethics, moral values and economic resources to develop Jersey Mike's restaurants; if transferee is an existing Jersey Mike's franchisee, transferee must be approved by Franchisor, in its sole and absolute discretion, for growth; Company receives a $5,000 transfer fee for Area Development Agreement and a $5,000 transfer fee for each Franchised Restaurant transferred; and, you and your affiliates and your respective Principals release Company from all claims. |
| n. Franchisor's right | Section 8.7 | Company has the right of first refusal to purchase your ownership interest or assets which are for sale and for which you have entered into a signed purchase agreement. Company may assign or transfer this right of first refusal to JMFS or any of Company's affiliates. |
| of first refusal to | ||
| acquire Franchisee's | ||
| business | ||
| o. Franchisor's option | Section 8.7 and 8.8 | Company has 15 Business Days from no tice of the signed purchase agreement to purchase your ownership interest or your assets at the same terms as those contained in the signed purchase agreement. Company may assign or transfer this purchase right to JMFS or any of Company's affiliates. |
| to purchase | ||
| Franchisee's business | ||
| p. Death or disability | 8.8 | Your heirs, beneficiaries, devisees or legal representative may apply to Company to continue operation of Developer's Business or to Transfer interests in Development Agreement or Developer's Business following death or permanent disability of Controlling Principal. Surviving Principals have 120 days to either qualify as a Controlling Principal or to hire a manager Company approves. If conditions are not met, you either must find a new Controlling Principal or sell the Agreement or Developer's Business within 120 days. If Principals fail to act, Development Agreement will terminate and company will have the option to buy Developer's Business. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER AND DISPUTE RESOLUTION (FDD pages 57–64)
What This Means (2025 FDD)
According to Jersey Mikes's 2025 Franchise Disclosure Document, there are several conditions under which the Area Development Agreement can be terminated.
One such condition involves the death or disability of the franchisee's controlling principal. In such cases, the heirs or legal representatives can apply to continue operations or transfer interests. Surviving principals have 120 days to either qualify as a controlling principal or hire an approved manager. Failure to meet these conditions requires finding a new controlling principal or selling the agreement within 120 days. If these actions are not taken, Jersey Mikes has the option to terminate the agreement and potentially buy the developer's business.
Additionally, Jersey Mikes has specific rights regarding the transfer of the Area Development Agreement. The company maintains the right of first refusal to purchase the franchisee's ownership interest or assets if they are for sale and a purchase agreement is in place. Jersey Mikes has 15 business days from the notice of the signed purchase agreement to exercise this option, and they may assign or transfer this right to JMFS or any of their affiliates. These provisions ensure Jersey Mikes retains control over who becomes an area developer and under what conditions.