Jack in the Box, which leases store locations and then subleases them to franchise owners is itself under fire from an association of franchisees that claims that a restructuring could leave them out in the cold.
According to Nation’s Restaurant News “the association, which represents 95 franchise owners who operate about 2,000 of Jack in the Box’s more than 2,200 restaurants, said the chain is altering how the company handles 1,800 master-lease agreements with landlords. Jack in the Box sub-leases those properties to franchise owners…On Oct. 8, Jack in the Box asked the property owners to transfer their lease agreements from Jack in the Box Inc. into a newly formed subsidiary, Jack in the Box Properties LLC, according to a letter obtained by the franchisee group.”
“Association lawyer Dan Watkins said landlords who don’t switch to the new company might be billing a “shell company” that Jack in the Box is no longer using to collect rental payments. He said landlords could also consider Jack in the Box’s real estate restructuring a breach of contract. That could lead to a landlord terminating a lease because they are dealing with a new company no longer directly backed by Jack in the Box Inc.”