Jack In The Box 2013 Annual Report Download - page 7

Qdoba Mexican Grill. The current Qdoba franchise agreement generally provides for an initial franchise fee of $30,000 per restaurant, a 10-year term
with a 10-year option to extend at a fee of $5,000, and marketing fees of up to 2% of gross sales. Most franchisees are also required to spend a minimum of
2% of gross sales on local marketing for their restaurants. Royalty rates are typically 5% of gross sales with certain agreements at 2.5%, as described below.
We offer development agreements to franchisees for the construction of one or more new restaurants over a defined period of time and in a defined geographic
area for a development fee, a portion of which may be credited against franchise fees due for restaurants when they are opened. If the developer does not
maintain the required schedule of openings, they may forfeit such fees and lose their rights to future development. During fiscal 2010 and 2011, as an
incentive to develop target markets, we entered into development agreements with an initial franchise fee of $15,000 and a royalty rate of 2.5% of gross sales
for the first two years of operation for each restaurant opened within the first two years of the development agreement, subject to certain limitations. As we
continue to pursue non-traditional locations, we may enter into franchise agreements that provide for a lower initial fee and lower royalty rates.

Our restaurants are operated by a company manager or franchise operator who is directly responsible for the operations of the restaurant, including product
quality, service, food safety, cleanliness, inventory, cash control and the conduct and appearance of employees.
Jack in the Box. Company restaurant managers are required to attend extensive management training classes involving a combination of classroom
instruction and on-the-job training in specially designated training restaurants. Restaurant managers and supervisory personnel train other restaurant
employees in accordance with detailed procedures and guidelines using training aids available at each location. Both company and franchise-operated
restaurants also use an interactive system of computer-based training (“CBT”), with a touch-screen computer terminal. The CBT technology incorporates
audio, video and text, all of which are updated via satellite. CBT is also designed to reduce the administrative demands on restaurant managers.
For Jack in the Box company operations, division vice presidents supervise directors of operations, who supervise district managers, who in turn
supervise restaurant managers. Under our performance system, these management levels are all eligible for periodic bonuses based on achievement of goals
related to restaurant sales, profit and/or certain other operational performance standards.
Qdoba Mexican Grill. At Qdoba company restaurants, we focus on attracting, selecting, engaging and retaining people who share our values to create
long-lasting positive impacts on operating results. Our Qdoba Career Map is the core development tool used to provide employees with detailed education by
position, from entry level to area manager. High performing general managers and hourly team members are certified to train and develop employees through a
series of on-the-job and classroom trainings that focus on knowledge, skills and behaviors. The Team Member Progression program within the Career Map
tool recognizes and rewards three levels of achievement for our cooks and line servers who showcase excellence in their positions. Team members must have,
or acquire, specific technical and behavioral skill sets to reach an achievement level.
For Qdoba restaurant operations, the division vice presidents supervise regional operations managers, who supervise district managers, who in turn
supervise restaurant managers. All levels are eligible for periodic performance bonuses based on goals related to restaurant sales, profit optimization and other
operations performance standards such as guest satisfaction.

Company-operated and franchise-operated restaurants devote significant resources toward ensuring that all of our restaurants offer quality food and
excellent service. To help us maintain a high level of customer satisfaction, our Voice of Guest program provides restaurant managers, district managers, and
franchise operators with ongoing feedback from guests who complete a short guest satisfaction survey via an invitation provided on the register receipt. In these
surveys, guests rate their satisfaction with key elements of their restaurant experience, including friendliness, food quality, cleanliness, speed of service and
order accuracy. In 2013, the Jack in the Box and Qdoba systems received more than 1.6 million and 0.2 million guest survey responses, respectively. We
also have a “mystery guest” program at Jack in the Box that provides restaurant managers, district managers, and franchise operators feedback on guest
service as evaluated by “secret shoppers” who visit the restaurant. Finally, our Guest Relations department provides feedback that guests report through our
toll-free number and via our website.

Our “farm-to-fork” food safety and quality assurance programs are designed to maintain high standards for the food products and food preparation
procedures used by the restaurants. We maintain product specifications and approve product sources. We have a comprehensive Hazard Analysis & Critical
Control Points (“HACCP”) system for managing food safety in our restaurants. HACCP combines employee training, testing, documented restaurant practices
and detailed attention to product safety and quality
5