Legal
AJP Enterprises and NHG Enterprises sued Jack in the Box on March 27, 2026 to block termination of 39 locations in the Seattle metro, and the franchisor counter-filed to prevent unauthorized closures.
A cross-default clause allows a franchisor to terminate all of a franchisee's agreements if the franchisee defaults on any single agreement. In the Jack in the Box Washington case, the operator's closure of eight underperforming locations was used by the franchisor as the trigger to terminate all remaining 39 locations. Multi-unit buyers should negotiate and review cross-default provisions in all franchise agreements before signing.
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According to published reporting, Steve Wazny acquired the 39 Jack in the Box locations directly from Jack in the Box in 2012 for approximately $27 million.
A tolling agreement temporarily defers a contemplated termination while parties negotiate. Jack in the Box and AJP entered a tolling agreement in November 2025, but it expired March 30, 2026 and Jack in the Box declined to extend it, leading directly to the competing lawsuits.
Two of Jack in the Box's largest Washington state operators filed competing lawsuits with the franchisor in March 2026, turning a $1.4 million dispute over unpaid marketing fees into a high-stakes legal confrontation that could close 38 Seattle-metro restaurants. The case illustrates a cross-default dynamic that all multi-unit franchisees should understand: a termination of one franchise agreement in a multi-unit portfolio can trigger termination of all remaining agreements under the same operator.[1]
AJP Enterprises and NHG Enterprises—both owned by franchisee Steve Wazny—filed a lawsuit on March 27, 2026, in Washington state court seeking to block Jack in the Box from terminating their 39 locations in the Seattle metropolitan area.[1][2] Wazny had operated these locations since 2012, when he acquired them directly from Jack in the Box for approximately $27 million.[1]
The dispute originated when Wazny closed eight underperforming locations. Jack in the Box invoked a cross-default provision in the franchise agreements, using the closures of those eight locations as grounds to terminate the remaining 39 active restaurants.[2] In November 2025, the two parties entered a tolling agreement that deferred any termination action while negotiations continued. That agreement expired March 30, 2026, and Jack in the Box declined to extend it.[1]
The competing litigation escalated when Jack in the Box separately sought a restraining order in Washington state court to prevent AJP Enterprises from closing 38 restaurants. The company argued the franchisee had "no contractual right" to close the restaurants and that unauthorized closures would harm brand equity and disrupt local markets.[3]
The franchisees' position, as stated in court filings, was that Jack in the Box's "attempted termination has nothing to do with brand protection and everything to do with financial leverage" and that the company's strategy was to "weaponize the cross-default provision to force plaintiffs into an involuntary sale at a distressed valuation."[2]
The Jack in the Box Washington case is a live demonstration of the cross-default risk that exists in virtually every multi-unit franchise agreement. Buyers developing portfolios under agreements containing cross-default provisions should understand two key implications.
First, financial distress in one location—missed marketing contributions, deferred royalties, or lease obligations—can trigger termination across the entire portfolio, even if all other locations are performing and current on obligations. This concentrates risk in ways that single-unit underwriting models often do not capture.
Second, the tolling agreement structure used in this case—a temporary deferral that expired without renewal—is a common dispute management tool. Buyers who enter franchise agreements with cross-default provisions should negotiate the duration and renewal terms of any tolling or forbearance arrangement before any single-location issue arises.
For buyers evaluating Jack in the Box specifically, Item 3 (Litigation) of the current FDD should disclose this and other active legal proceedings. Buyers should also review Item 17 (Renewal, Termination, Transfer, and Dispute Resolution) carefully, since this section governs how cross-default and termination rights are defined and triggered.[1][2]
The $1.4 million disputed amount—unpaid marketing fees—illustrates the magnitude difference between the alleged debt and the $27 million investment at risk. Multi-unit buyers should model the cumulative marketing fund contribution liability over the full agreement term and stress-test that figure against projected cash flows.[1]
The Washington state court proceedings will determine whether the tolling agreement, the cross-default clause, or the underlying marketing fee obligation controls the outcome. A ruling in the franchisees' favor would limit the franchisor's ability to use cross-default provisions as leverage in fee disputes—a decision that could affect franchise agreements across the entire Jack in the Box system and serve as precedent in similar multi-unit disputes. A ruling for the franchisor would affirm broad termination rights based on cross-default. Either outcome will be disclosed in Item 3 of future Jack in the Box FDD amendments. Buyers currently in disclosure should request the most recent FDD version and confirm whether any amendment has been filed since March 2026 to reflect this litigation.[2][3]