Operating a company on a franchise model can be profitable both for the parent company and for the small business owners that operate individual franchise locations (called “franchisees”). The parties get to divide the decision-making responsibility in a way that makes sense. The parent company is responsible for deciding the brand’s direction and projecting an image that resonates with customers, while the franchisees are responsible for the operation of their own franchise locations. The parties also share expenses and profits, and this is often the cause of disputes between franchise owners and the company with which they franchise. For example, Jack in the Box restaurants recently settled a lawsuit with a group of its franchisees, but in this case, the issue was transparency about marketing efforts. If you are a franchise owner involved in a dispute with the company from which you franchise, contact a San Diego business law attorney.
Franchisees Have Had Enough of Jack in the Box Clowning Around With the “Advertising Budget”
Jack in the Box hamburger restaurants have been a recognizable fixture in San Diego since the 1950s, and the company has successfully conducted some memorable advertising campaigns: from the “Jack’s Back” commercials in the 1990s to the bowl haircut commercials of the fall of 2009. It has also had its share of image problems, such as when shipments of meat from Australia, destined for U.S. restaurants, were supposed to contain beef but actually contained horse meat and kangaroo meat, and the less said about the “Angus beef” controversy of 2007, the better.
The dispute that settled between Jack in the Box and a group of its franchisees was something different, however. The franchisees were frustrated because, starting in 2017, sales at most of the restaurant’s locations declined, and the franchisees blamed insufficient advertising. They alleged that Jack in the Box CEO Lenny Comma was making irresponsible cuts to the advertising budget, and to make matters worse, he refused to show them the budget when asked. The franchisees began to call for the removal of Comma. The company, however, did not remove him. Instead, he left the company when he retired in early 2020. The new CEO, Darin Haris, was much more accommodating to the franchisees. In late 2020, Haris settled the lawsuit with the franchisees. The details of the settlement have not become public, so it is unclear how much money the franchisees received.
Even though this lawsuit settled, reaching an agreement cost a lot of money for the franchisees and for the Jack in the Box. The sooner you contact a business law attorney, the sooner you can stop losing money and start finding solutions.
Contact Foldenauer Law Group About Franchise Disputes
A business dispute lawyer can help you resolve your differences with the company from which you franchise a restaurant or other kind of business, and the sooner you contact a lawyer, the better. Contact Foldenauer Law Group, APLC in San Diego, California to discuss your case.