What actions must a Carls franchisee take to remove the Proprietary Marks upon termination or expiration?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
E. Franchisee immediately shall discontinue all use of the Proprietary Marks in connection with the Franchised Restaurant and of any and all items bearing the Proprietary Marks; remove the Proprietary Marks from the Franchised Restaurant and from clothing, signs, materials, motor vehicles and other items owned or used by Franchisee in the operation of the Franchised Restaurant (unless CJR directs Franchisee to temporarily refrain from doing so while CJR determines if it will exercise its option under Section 23); cancel all advertising for the Franchised Restaurant that contains the Proprietary Marks (including telephone directory listings); and take such action as may be necessary to cancel any filings or registrations for the Franchised Restaurant that contain any Proprietary Marks.
F. Unless CJR directs Franchisee to temporarily maintain the existing appearance of the Franchised Location while CJR determines if it will exercise its option under Section 23, Franchisee
promptly shall make such alterations and modifications to the Franchised Location as may be necessary to clearly distinguish to the public the Franchised Location from its former appearance and also make those specific additional changes as CJR may request for that purpose. If Franchisee fails to promptly make these alterations and modifications, CJR shall have the right (at Franchisee's expense, to be paid upon Franchisee's receipt of an invoice from CJR) to do so without being guilty of trespass or other tort.
- G. Franchisee shall furnish CJR, within 30 days after the effective date of termination or expiration, evidence (certified to be true, complete, accurate and correct by an authorized officer of Franchisee) satisfactory to CJR of Franchisee's compliance with Sections 22.A. through 22.F.
- H. Franchisee shall not, except with respect to a restaurant franchised by CJR or its affiliates which is then open and operating pursuant to an effective franchise agreement or a restaurant franchised by CJR or its affiliates which is under construction pursuant to a fully-signed franchise agreement: (1) operate or do business under any name or in any manner that might tend to give the public the impression that Franchisee is connected in any way with CJR or its affiliates or has any right to use the System or the Proprietary Marks; (2) make, use or avail itself of any of the materials or information furnished or disclosed by CJR or its affiliates under this Agreement or disclose or reveal any such materials or information or any portion thereof to anyone else; or (3) assist anyone not licensed by CJR or its affiliates to construct or equip a foodservice outlet substantially similar to a Carl's Jr. Restaurant.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a franchisee faces several requirements regarding the Proprietary Marks upon termination or expiration of the franchise agreement. The franchisee must immediately discontinue all use of the Proprietary Marks in connection with the Franchised Restaurant and on any items bearing those marks. This includes removing the Proprietary Marks from the restaurant itself, as well as from clothing, signs, materials, motor vehicles, and other items used in the restaurant's operation. However, Carls may direct the franchisee to temporarily refrain from removing the marks while Carls determines whether to exercise its option to purchase the restaurant.
In addition to physical removal, the franchisee must cancel all advertising for the Franchised Restaurant that contains the Proprietary Marks, including telephone directory listings. They must also take necessary actions to cancel any filings or registrations for the Franchised Restaurant that include any Proprietary Marks. Unless Carls directs otherwise, the franchisee must promptly alter and modify the Franchised Location to clearly distinguish it from its former appearance and make any additional changes requested by Carls for that purpose. If the franchisee fails to do so, Carls has the right to make these alterations at the franchisee's expense.
Furthermore, within 30 days after the termination or expiration date, the franchisee must provide Carls with evidence, certified by an authorized officer, demonstrating their compliance with all these requirements. The franchisee is also prohibited from operating under any name or manner that might suggest a connection with Carls or the Proprietary Marks, or from assisting anyone not licensed by Carls to construct or equip a similar foodservice outlet. These measures ensure that upon termination or expiration, the franchisee completely separates from the Carls brand and system, protecting Carls's Proprietary Marks and preventing any potential confusion among the public.