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Do I Have to Pay a Franchise Fee Every Year?

Do I Have to Pay a Franchise Fee Every Year?

Are you trying to figure out if you have to pay a franchise fee every year your business is in operation?

At Jack in the Box, this is a common question we receive from new and potential franchisees.

In this article, we will go over how often you’re required to pay your franchise fee and when it is due.

What Is a Franchise Fee?

A franchisee fee is essentially a license for you to own and operate a franchise business.

This is the cost of entry for access to benefits like the franchisor’s brand, existing customer base, business systems, real estate support, and ongoing training.

Franchising is a lot like having a driver’s license. It comes with many advantages. However, your license can be taken away if you don’t follow the rules.

Some reasons for termination of your franchise agreement include:

  • Failure to pay fees.
  • Selling unapproved products.
  • Not meeting food safety standards.

You can learn more about renewal, termination, and transfer of your franchise agreement in Item 17 of our Franchise Disclosure Document.

How Much Is the Jack in the Box Franchise Fee?

At Jack in the Box, our initial franchise fee is $50,000 for each traditional franchised restaurant plus any tax or other fees due to the collection of your payment.

This initial franchise fee is due when you sign your franchise agreement which is typically a 20-year contract that allows you to operate as a franchisee.

What If I Sign Up for Multiple Locations?

If you sign a multi-unit development agreement with Jack in the Box, we grant you the right to construct an agreed-upon number of Jack in the Box restaurants in a specified geographic area.

If you are a new franchisee to our system, you must pay us a non-refundable development fee when you sign your multi-unit development agreement.

The fee is calculated as follows:

  • $50,000 for the first new restaurant.
  • $10,000 deposit for each additional new restaurant.

Both payments are non-refundable, and the remainder of your franchise fee ($40,000 per additional new restaurant) is due when you sign your franchise agreement; which is typically within 90 days of opening for each of your locations.

Do I Have to Pay a Franchise Fee Every Year?

In summary, you’re only required to pay your initial franchise fee when you sign your franchise agreement.

This is a one-time payment that gives you a license to own and operate your franchise business for an agreed upon number of years.

The only time you’ll be required to pay this fee again, is at the end of your initial term if you decide to renew or extend the terms of your franchise agreement.

Keep in mind, this is only how we collect this fee at Jack in the Box. All franchise businesses are different.

Be sure to read the Franchise Disclosure Document associated with the brand you’re interested in to learn more about how they collect your franchise fee.

Check Out These Additional Resources

We hope this article gave you a better understanding of how often you’re required to pay a franchise fee.

At Jack in the Box, we work with our franchisees every step of the way to get their restaurants up and running.

Here are some additional online resources you may like to check out:

If you have any questions, please contact our franchise sales and support team.

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