A40/100FDD 2026
Jack in the Box — Litigation & Risk
Food & Beverage - Full Service · FDD Items 3, 4 & 5
Elevated Risk
12 cases disclosed in FDD Items 3 and 4.
Source: FDD Items 3–5
FDD Items 3 & 4
Litigation Metrics
Cases disclosed
12
Total from FDD Items 3 and 4
Bankruptcy (Item 4)
—
Franchisor or officer bankruptcy
Overall risk score
40 / 100
FranchiseVerdict composite
Rating
STRONG
STRONG / MODERATE / CAUTION / AVOID
7(a) FOIA data · FY2020–present
SBA Loan Performance
Aggregated from public SBA 7(a) loan disclosures. Default rate is the share of loans that were charged off or settled for less than the full balance.
Total 7(a) loans
4
Government-backed loans issued
Default rate
—
vs <3% typical · system-wide
5-yr default rate
—
Defaults
0 loans
Loans charged off or defaulted
Total loan volume
$8.4M
Avg loan size
$2.1M
Participating lenders
4
FDD Items 5, 6 & 17 — what you give up
Contract Risk Indicators
Mandatory arbitration
Not required
You retain the right to sue in court
Jury trial waiver
Waived
You give up the right to a jury trial
Non-compete
1 yrs
Post-termination restriction on similar businesses
Franchisor can compete
Yes
Franchisor can open competing locations in or near your territory
Right of first refusal
Yes
Franchisor can match any purchase offer when you try to sell
Governing law
California
State whose law governs disputes — relevant if you're not based there
What drove the 40/100 rating
Risk Score Breakdown
- 01MINORDeclining unit count (-2.7% YoY) indicates system contraction and potential market saturation or franchisee dissatisfaction
- 02MEDNo disclosed average net income despite $1.91M-$4.04M investment creates opacity around actual profitability and ROI
- 03HIGHMultiple active litigation cases across multiple states (Philippines, Texas, Washington) plus historical pattern of franchisee disputes suggests systemic franchisor-franchisee relationship issues
- 04HIGHGoing Concern status = False (company reported going concern doubts), indicating financial instability at corporate level
- 05HIGHHeavy litigation history including class actions (gift cards), franchisee association suits, and multi-state disputes suggests pattern of enforcement/transparency problems
- 06MED5% royalty on disclosed $1.91M average revenue = ~$95,668 annual royalty plus operating costs makes profitability questionable without disclosed net income
Severity inferred from FDD text — not a regulatory or legal classification
Litigation data from FDD Items 3, 4, and 5. SBA data from public 7(a) FOIA records (FY2020–present). Not legal advice — consult a franchise attorney before signing any franchise agreement.