What assets can CJR exclude from the purchase when exercising its option to purchase assets from a Carls franchisee?

According to the 2024 Carls FDD, when CJR exercises its option to purchase assets from a franchisee, it has the right to exclude certain assets from the purchase. Specifically, CJR can exclude any equipment, vehicles, furnishings, fixtures, signs, and inventory that do not meet the then-current standards for a Carl's Jr. Restaurant. This means that if the franchisee has not kept up with the brand's standards or has unapproved items, CJR is not obligated to buy those particular assets.

Additionally, CJR can exclude any assets for which the franchisee cannot provide a Bill of Sale in a form satisfactory to CJR. This requirement ensures that the franchisee can legally transfer ownership of the assets to CJR. If the franchisee cannot provide the necessary documentation, CJR can choose not to purchase those assets.

These stipulations protect CJR by allowing them to only acquire assets that align with the brand's standards and for which clear ownership can be established. For a prospective franchisee, this highlights the importance of maintaining brand standards and keeping accurate records of asset ownership to ensure a smooth potential sale of assets back to Carls upon termination or expiration of the franchise agreement.