The National Jack in the Box Franchisee Association (JIB-NFA) today announced a call for decisive action from the Board of Directors at Jack in the Box Inc. (NASDAQ: JACK) amid growing concern that the health of the brand as a whole may be in jeopardy. Franchise owners are concerned with the trend of declining transactions while continued cuts to essential resources and a lack of strategic leadership show no signs of reversing the trend.
The National Jack in the Box Franchisee Association, whose membership represents nearly 2,000 restaurants out of a system-wide total of 2,240 Jack in the Box restaurants, question the effectiveness of a myriad of decisions that have been made that are damaging franchisees’ businesses today and undermining their long-term profitability and the long-term health of the Jack in the Box brand. Franchise owners are concerned that leadership does not share their passion for the brand.
The Jack in the Box brand remains silent, limiting any interactions to letters between the organizations’ legal counsels. Therefore, the franchisee association is now calling for the following specific and immediate measures:
1. A solutions-focused meeting between the franchisee association and the board of directors to arrest the decline of transactions
2. A seat on the board of directors to ensure franchise owners’ can protect their vested interest in the success of the Jack in the Box brand
3. An audit of the marketing fund contributed to by franchisees, including a meaningful review of Jack In the Box's expenditures from that fund
4. A seat at the table where decisions are being made regarding cuts to essential resources
“Many of our members operate restaurants with multiple brands and have a broad perspective on the behavior of the leadership team both with regard to the cuts being made to reduce G&A spending and the communication with franchise owners,” said Anil Yadav, Board member for the Jack in the Box National Franchisee Association. “Franchise owners are a brand’s most significant stakeholders as our success determines the success of all stakeholders including investors, employees, corporate, and even customers. From that important position, we need to know that our investment in the brand is secure and that our input is considered, as it is our on-the-ground level input that could lead to solutions to the rate of declining transactions.”
Jack in the Box Inc. publicly stated it would cut G&A spending from 3.7% to 1.8%, leading to the elimination of essential resources necessary to turn the brand around.
“Operators are concerned that cuts already being made have not positively impacted the company’s revenue stream or EBITDA, and we fear that more cuts will exacerbate the decline of transactions,” said Kevin Townsend, Secretary for the Jack in the Box National Franchisee Association. “We need leadership with a strategic vision for the future and a plan to drive transactions, rather than the current management actions that makes JACK appear to be an attractive investment to the Street. We are asking for the board of directors help to act on this recommendation as quickly as possible.”
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