After a tenuous couple of years between Jack in the Box and the National Jack in the Box Franchisee Association (NFA), both sides have reached an agreement from a lawsuit filed in late 2018.
The NFA represents roughly 85 percent of the 2,100 franchised restaurants. The lawsuit accused Jack in the Box of failing to uphold its contractual obligations, which the NFA claimed had a negative financial impact. The primary focus was the breach of a 1999 agreement with the NFA in which Jack in the Box allegedly refused to be transparent when it came to the marketing fund. There was also a dispute about Jack in the Box requiring franchisees to take on major remodeling programs. The lawsuit was filed two years after failed negotiations between the two sides.
Neither Jack in the Box or the NFA gave specific details about the lawsuit settlement, but Jack in the Box has agreed to share details of the marketing fund with franchisee representatives. The chain will also create a Leadership Advisory Council to facilitate more conversations between the company and franchisees.
“We are very excited for what is ahead for this brand, we could not do it without the support of all our franchisee partners, especially those within the National JIB Franchise Association,” said CEO Darin Harris in a statement.
The resolution comes in the wake of what appeared to be a quickly deteriorating relationship between the brand and its franchisees. The NFA not only pursued court action in 2018, but it also filed a complaint in California in response to Jack in the Box’s financial restructuring strategy and called for then CEO Lenny Comma to resign.
Harris, after beginning his tenure as CEO in June, quickly worked with Chief Legal and Risk Officer Sarah Super to start conversations with the NFA. Jack in the Box and franchisee leadership spent the past several months ironing out details of the settlement.
The NFA credited legal advisors Robert Zarco, Robert Salkowski, Patricia Hollenbeck, and John Lewis in reaching the agreement.
“It is clear that Darin understands the value that maintaining a healthy and happy franchise community can bring,” said NFA President Rabi Viswanath in a statement. “We are grateful for his leadership and are excited to unite behind him as he stewards this brand to its fullest potential. Trust and communication are paramount to our joint success and we strongly believe that we now have the framework for a great relationship.”