The National Jack in the Box Franchisee Association (NFA) has filed a complaint against the American fast-food restaurant chain regarding its new financial restructuring strategy.
The NFA filed the complaint with the California Department of Business Oversight and expressed fear that they could lose their restaurant leases under the restructuring and wants the agency to look into the proposal.
According to the NFA, the restaurant chain informed its intentions to landlords of 1,800 different properties about the restructuring strategy in order to increase credit worthiness and secure new financing.
As part of the proposed restructuring, the company intends to realign its assets and revenues including its portfolio of property leases among its newly created subsidiaries.
The company urged the current landlords to transfer their lease agreements from Jack in the Box into its newly formed subsidiary, Jack in the Box Properties.
Dan Watkins, an attorney representing the NFA, said: “The intent behind filing this complaint is to protect the tenant rights of franchisees who have invested their life savings in these buildings.
“We are asking the state who licences and regulates franchising and the restaurant to insure the franchisees are protected from losing their livelihood as well as their employees.”
The current agreement covers 1,800 leased properties, for which, the company is identified as the primary lessee. The properties are sub-leased to franchise owners who pay all rents, taxes, and insurance to Jack in the Box.