In July, the franchisor of the Jamba Juice franchise system (which offers “smoothies, juices and bowls”) announced that the system would be dropping “Juice” from its name and re-branding simply as “Jamba.” As reported by Blue MauMau, “[t]he change in brand comes as a rising tide of press from Time magazine to the Washington Post have reported that drinking juice can be as unhealthy as consuming soda.” Interestingly, however, juice will remain one of the brand’s core offerings, even though the franchisor’s president touted the re-branding as an effort, “to meet our guests’ ever-changing definition of wellness.”
Admittedly, the branding exercise does come with some menu changes. However, according to Blue MauMau, it also comes with a requirement for franchisees systemwide to purchase new signage and packaging for their products (and of course menus). Franchisees will also be required to “invest” in a large-scale store remodel and begin allowing customers to order ahead and have their orders delivered by Postmates and Uber Eats.
All of this comes as systemwide sales are down year-over-year and as the number of franchisees in the system is dropping.
Dealing with (and Paying For) Mandatory Updates as a Franchisee
As is typically the case, this appears to be a top-down overhaul. Franchisors routinely require their franchisees to adopt (and pay for) updates to their outlets—with varying degrees of investment and success. Regardless of whether dropping the word “Juice” from the brand will draw in more health-conscious customers, the only thing that is certain for the system’s franchisees is that they will be forced to cover expenses they didn’t anticipate when they signed their franchise agreements. Thanks to the “mandatory updates” provision in those agreements (which franchisors often consider to be non-negotiable), franchisees nationwide will be forced to overhaul their franchises essentially on demand.
This is just one example of how franchisors are able to exert significant control over their franchisees. Jamba Juice (or should we say Jamba?) franchisees will have little choice but to comply, as any that choose not to do so will likely face default-based terminations. Those that do not believe in the value of the re-branding (or that cannot afford the additional investment) will find themselves between a rock and a hard place; yet, if the exercise proves fruitless, franchisees who comply will suffer the consequences alongside the franchisor.
Of course, the re-branding exercise could be a success. Dunkin’ (formerly Dunkin’ Donuts), KFC (formerly Kentucky Fried Chicken), and other franchises have successfully transformed their brand identities. Only time will tell; but, in the meantime, it is Jamba franchisees who will be forced to play the waiting game.
Experienced Legal Representation for Franchisees Nationwide
Jeffrey M. Goldstein is a national franchise lawyer who has more than 30 years of experience exclusively representing franchisees and dealers. If you have questions about buying a franchise or about your legal rights as an existing franchisee, you can call 202-293-3947 or contact us online for a free consultation.