What aspects of the Carls franchise system can CJR modify at its sole discretion?

According to the 2024 FDD, CJR has the right to modify certain aspects of the Carls franchise system at its sole discretion. CJR can waive, defer, or permit variations from the system standards or the applicable agreement to any franchisee or prospective franchisee. This decision can be based on the peculiarities of a particular site, existing building configuration or circumstance, density of population, business potential, trade area population, or any other condition or circumstance. However, CJR also has the right to deny any such request if it believes it would not be in the best interests of the Carls system.

This discretion allows Carls to adapt its franchise requirements to suit specific local conditions, potentially making it easier for franchisees to establish and operate their restaurants in diverse markets. For example, a franchisee in a densely populated urban area might be granted variations to accommodate smaller store footprints or unique operational challenges compared to a franchisee in a suburban or rural location.

However, this discretion also introduces an element of uncertainty for prospective franchisees. While variations may be beneficial, there is no guarantee that CJR will approve a franchisee's request for deviation from the standard system. Franchisees should carefully assess their specific site and market conditions and discuss any potential need for variations with Carls during the due diligence process. Understanding the factors that CJR considers when granting waivers or deferrals can help franchisees better prepare their proposals and manage their expectations.

Furthermore, Carls retains control over improvements or new concepts developed by franchisees. If a franchisee develops any new concepts, processes, or improvements related to the Carls system, they must notify CJR, and all information regarding the new concept becomes the property of CJR and its affiliates. These improvements may be incorporated into the system without any payment to the franchisee, which is a fairly standard clause in franchise agreements to protect the brand's intellectual property and ensure consistency across the system.