What are the conditions under which a Carls franchisee can relocate the franchised restaurant without paying an additional initial franchise fee or transfer fee if they lose possession of the original location?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Notwithstanding the foregoing, if, during the term of this Agreement, Franchisee, through no act or failure to act on its part (except the failure to extend the lease for the Franchised Location through the Initial Term of this Agreement), loses the right to possession of the Franchised Location, the Initial Term shall expire as of the date of the loss of the right to possession. However, if the right to possession is lost through no act or failure to act on Franchisee's part, Franchisee may relocate the Franchised Restaurant (without paying any additional initial franchise fee or transfer fee) at its expense and the Initial Term shall not expire if: (1) CJR accepts the new location; (2) Franchisee constructs and equips a Franchised Restaurant at the new location in accordance with the then-current System Standards and specifications; (3) a Franchised Restaurant at the new location is open to the public for business within 6 months after the loss of possession of the Franchised Location; and (4) Franchisee reimburses CJR for all reasonable expenses actually incurred by CJR in connection with the acceptance of the new location.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a franchisee may be able to relocate their restaurant without incurring an additional initial franchise fee or transfer fee if they lose possession of their current location through no fault of their own, with an exception for failing to extend the lease.
To qualify for this fee waiver, Carls requires that the new location be accepted by them. Additionally, the franchisee must construct and equip the new restaurant according to the then-current System Standards and specifications. The relocated restaurant must be open for business within six months of losing possession of the original location.
Finally, the franchisee is responsible for reimbursing Carls for all reasonable expenses actually incurred by Carls in connection with the acceptance of the new location. Meeting these conditions allows the franchisee to continue operations without additional fees, provided the loss of possession was not due to their own actions or inactions regarding the lease.