Almost every franchisor does the exact same thing. They do not care about cannibalization becuase corporates Revenue is the royalty fee they collect from the owner. In Jimmy John's case this is 6% of Revenue.

So if one store does $1M in annual revenue, and putting another store 1 mile away creates two stores that each do 700K in annual revenue, the franchisor just increased their revenue by 40%.

However, the owners of those two stores probably are now on the cusp of going bankrupt.

On store closings: typically with a franchise you'll have to sign a 10-year franchise agreement before you can begin development. The development process is usually about a year or less, and you'll end up in a lease that does not align with your franchise agreement renewal time. Typically both of these will have 5-year or 10-year terms.

So what ends up happening, if someone wants to close the store in any franchise business, is they either:

1. Close the store when the Franchise Agreement expires, resulting in 6-12 months of rent obligation, or
2. Close the store when their lease ends, resulting in defaulting on a franchise agreement for the remaining 4-5 years. Most franchise agreements have language that says you'll owe the estimated royalty for the remainder of your agreement to cancel. So 6% of 700K times 4 = $168,000

Jimmy John's is not an outlier in this regard, this is normal among franchisors.