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Franchisees file lawsuit against parent company

Those who choose to buy franchises in Texas and other states generally do so to take advantage of the brand exposure it provides. However, a lawsuit against Jack in the Box filed in Los Angeles claims that the company's CEO lacks a vision for the brand. The suit was filed by the National Jack in the Box Franchisee Association, and it claims that this lack of vision is causing the company to lose market share.

The lawsuit also says that franchisees were not paid for roof repairs that were conducted on corporate-owned stores. These stores were later sold to franchisees, and the full costs of these repairs were supposed to be covered by the company's Incentive Program. Ultimately, these costs were reclassified as remodeling costs. The suit claims that this was done in an effort to shortchange franchise owners.

The company is said to have be in breach of its franchise contract by not giving franchisees access to marketing fund audits. They were given the right to see them as part of an agreement reached in 1999 between the company and the National Jack in the Box Franchisee Association. This entity represents roughly 1,900 Jack in the Box franchise owners. As of Sept. 30, 2018, 94 percent of Jack in the Box Locations were operated by franchisees.

If a breach of contract occurs, the type of relief a party may be entitled to depends on the severity of the breach. In some cases, the offending party may be able to remake a product or continue to offer a service provided for in the contract. However, if this is not possible, a financial penalty may be awarded. An attorney may review a contract to determine if a breach occurred and what type of remedy to pursue.

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