Jack in the Box franchisees want a board seat

The franchise association, which has called for a new CEO, is also asking for an audit of the company’s marketing fund.
Photograph: Shutterstock

Jack in the Box franchisees, weeks after calling for the company to replace CEO Lenny Comma, are now asking for a role in making that decision, with a seat on the company’s board of directors.

The National Jack in the Box Franchisee Association (NFA), which represents some 84% of the system, is also asking for an audit of the company’s marketing fund as part of a new group of requests of its franchisor.  

“We think the best way for them to get a true sense of the needs of the largest stakeholder group in the entire Jack in the Box system would be for franchisees to have a seat at the table,” Michael Norwich, chairman of the franchisee association, said in an interview with Restaurant Business. “We love this brand. This is our livelihood. We’re more invested in it than any other stakeholder. We should be heard.”

The franchisees are also asking for a “solutions-focused meeting” with management to discuss the decline in transactions at the 2,240-unit chain. The association says it represents franchisees with 1,900 total locations.

In a statement, Jack in the Box said the association’s views “are not reflective of the entire franchise community.”

“We remain open to working with the NFA, as we always have, to address any legitimate concerns,” Jack in the Box said. “As the company stated previously, we believe the viewpoints being expressed by the NFA leadership are not reflective of the entire franchise community, and we will continue to work with all our franchisees to develop and refine our strategy for success and ensure our ultimate goals are fully aligned.”

The association’s request comes just as Jack in the Box has agreed to name two independent directors chosen by the activist investor Jana Partners. Jana owns 6.7% of Jack in the Box stock.

Earlier this month, the NFA passed a “no confidence” vote in management and asked for a new CEO.

The group says that the company has not met with the franchisees since then. “They’re not calling us,” Norwich said. “We’re in the dark.”

The franchisees say they have a right to an audit of the company’s marketing fund, to which operators contribute a percentage of their revenues. Norwich says the franchisees have a right under a 1999 settlement to audit the fund and has made three requests to do so.

Operators have been complaining about the lack of a chief marketing officer and departures in the chain’s marketing department. CMO Iwona Alter stepped down two months ago and this week was named chief brand officer at Habit Restaurants.

Kevin Townsend, secretary for the association, said the company’s marketing calendar only goes through March. He is an operator of other brands with four-year calendars.

“We’re going quarter to quarter, month to month,” he said. “It’s frustrating from an operations standpoint when there’s not enough resources.”

The franchisees complain about a decline in corporate spending, which it says the company plans to reduce to 1.8% of revenues from 3.7%. They say this has led to the elimination of many resources at the company and delays in certain projects.

One such delay, they said, was the installation of credit card chip readers at the franchisees’ locations. Operators paid for those readers in June, but the project was recently stopped because of an unknown “glitch.”

“They’re not communicating,” Norwich said. “It’s just more symptomatic of the overall picture and our frustration.”

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