Jersey Mike's Franchise Disclosure Document Analysis

Mandatory Affiliate Purchases Create Substantial Cost and Rebate Exposure

Franchisees are required to purchase substantially all food, paper, and supply products from Company-designated vendors distributed through Sysco Corporation. Affiliated entity FoodCo received over $100 million in supplier payments in 2022, and the Company itself received over $12.5 million from the mandatory credit card processing supplier.

Source: p.32

Advertising Fund Lacks Audit, Proportionality, and Spending Transparency

Franchisees are required to contribute up to 5% of gross receipts to the National Media Fund and Corporate Advertising and Development Fund, with the total advertising obligation potentially capped at 6%. The franchisor retains sole discretion over how these funds are spent, with no audit requirement and no obligation to spend in proportion to contributions or in any particular market.

Source: p.18

Renewal Requires Then-Current Agreement With Potentially Different Terms

The franchise agreement provides one 10-year renewal option, but renewal requires execution of the Company's then-current franchise agreement form, which may contain materially different fees, territory definitions, or operating standards compared to the original agreement.

Source: p.53