What action will Carls require of the Developer regarding stockholders, managers, directors, members, officers, restaurant managers, and family members of guarantors?

According to Carls's 2024 Franchise Disclosure Document, Carls can request that the Developer obtain covenants from its stockholders, managers, directors, members, officers, or restaurant managers, as well as from family members of the guarantors. These covenants would be similar in substance to those outlined in Section 12 of the agreement.

This means that Carls has the right to ask the Developer to ensure that these individuals agree to certain restrictions and obligations, although the FDD does not specify what those restrictions are. The purpose is likely to protect Carls's interests and ensure compliance with the franchise agreement across all levels of the Developer's organization and among related parties.

It is important for a prospective Carls franchisee to understand the scope and nature of these potential covenants. Franchisees should discuss with Carls what specific obligations these individuals might be subject to and how these requirements could impact the franchisee's operations and relationships with their personnel and their guarantors' families. Understanding these obligations is crucial for assessing the overall commitment and potential liabilities associated with the Carls franchise.