As the franchisor forms a new subsidiary to manage its real estate, Jack in the Box’s franchisees are unhappy with the impending restructuring of lease agreements.
Jack in the Box franchisees have filed a complaint with the California Department of Business Oversight over the brand’s planned lease restructuring that they say leaves operators exposed to losing their livelihood, according to a recent Restaurant Business article.
The complaint was filed by the National Jack in the Box Franchisee Association amid the company’s attempt to establish a new real estate subsidiary to manage some of the leases it controls. Jack in the Box controls the leases of approximately 1,800 franchise locations by leasing them from landlords and then subleasing to franchisees, a common practice for fast-casual brands. By establishing a new subsidiary, franchisees would have to transfer their leases, something they say would expose them to too much risk.
“We are asking the state who licenses and regulates franchising and Jack in the Box Inc. to ensure the franchisees are protected from losing their livelihood as well as their employees,” Dan Watkins, an attorney representing the franchisee association, said in a statement.
Jack in the Box has yet to comment on the complaint.
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