What is the amount of the Development Fee that a Carls developer must pay for each Franchised Restaurant they agree to develop?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
timely comply with the development plan or any material aspect of the development plan shall constitute a material, non-curable breach of this Agreement, permitting CJR to terminate this Agreement immediately by giving written notice of termination to Developer.
- C. The Initial Franchise Fee for each Franchised Restaurant required to be developed under this Agreement is $25,000.
- D. If, during the Development Term, Developer sells a Franchised Restaurant that was developed pursuant to this Agreement, that Franchised Restaurant will continue to be counted as a Franchised Restaurant for the purpose of meeting Developer's obligations under the Development Schedule, provided that the sale has been consented to by CJR and o
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to the 2024 FDD, a Carls developer must pay a Development Fee of $10,000 for each franchised restaurant they commit to develop within the designated Development Territory during the Development Term. This fee is payable to CJR, the parent company, upon signing the Development Agreement. The total amount of the Development Fee is detailed in Appendix B of the agreement.
Carls considers the Development Fee fully earned upon payment and specifies that it is non-refundable. However, upon the execution of each individual Franchise Agreement for a restaurant within the development plan, Carls will credit the $10,000 Development Fee towards the Initial Franchise Fee due for that specific restaurant.
This arrangement is fairly standard in the franchise industry, where development fees are often used to secure development rights and are later credited towards franchise fees. Prospective Carls developers should note that while the Development Fee is non-refundable, it effectively serves as a pre-payment towards the Initial Franchise Fee for each location they develop, reducing the upfront investment required when the individual franchise agreements are signed.