What conditions must be met for Carls' approval of a franchise transfer?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Section In Franchise Agreement | Summary | |
|---|---|---|---|
| l. | Our approval of transfer by you | Sections 18.B & 8.G. | Unless otherwise expressly permitted, you must obtain our prior written consent for any Transfer (as defined in the Franchise Agreement). |
| m. Conditions for our approval of transfer | Sections 18.BC. | Conditions include: transferee qualified; reasonable sales price; payment of amounts due; no default under any agreement with CJR or its affiliates; no default beyond the applicable cure period under any real estate or equipment lease or financing instrument relating to the Franchised Restaurant or agreement with any vendor or supplier to the Franchised Restaurant; signed release; transferee must complete training; compliance with all obligations to us or our affiliates under transferee's and each of transferee's affiliates development and franchise agreements with us or our affiliates; remodeling, maintenance and facility upgrades to modernize Franchised Restaurant to current image; transfer fee paid; and agreements signed. | |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 61–66)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a franchisee needs to obtain prior written consent from Carls to transfer their franchise. The conditions for approval include several stipulations to ensure the transferee is qualified and the transfer does not negatively impact the Carls brand.
Specifically, the transferee must be qualified to operate the franchise, and the sales price must be reasonable. All outstanding payments owed to CJR or its affiliates must be settled, and there can be no existing defaults under any agreements with CJR or its affiliates. Additionally, the franchisee must not be in default beyond any applicable cure period under any real estate or equipment lease, financing instrument related to the Franchised Restaurant, or any agreement with a vendor or supplier.
Furthermore, the transferring franchisee must sign a release, and the transferee is required to complete the necessary training programs. The Franchised Restaurant must undergo any necessary remodeling, maintenance, and facility upgrades to meet the current image standards of Carls. A transfer fee must be paid, and all required agreements must be signed to finalize the transfer. Finally, the transferee must comply with all obligations to Carls or its affiliates under the transferee's and each of transferee's affiliates development and franchise agreements with Carls or its affiliates.