What constitutes commencement of construction for a free-standing Carls Jr. Restaurant?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
As used in this Agreement, construction shall have commenced only after Franchisee has obtained all required permits and: (a) with respect to a free-standing Franchised Restaurant, Franchisee has begun the installation of building footings with the intent to maintain continuous construction thereafter; or (b) with respect to a non free-standing Restaurant or a Restaurant being converted from a prior use, Franchisee has begun the installation of sub-floor plumbing with the intent to maintain continuous construction thereafter.
Once construction has commenced, it shall continue uninterrupted (except for interruption by reason of events constituting Force Majeure as defined in Section 28) until completed. If events constituting Force Majeure cause a delay in the commencement of construction of the Franchised Restaurant, CJR shall proportionately extend the Opening Date for the Franchised Restaurant. Notwithstanding the occurrence of any events, except events constituting Force Majeure, construction shall be completed and the Franchised Restaurant shall be furnished, equipped and shall otherwise be ready to open for business in accordance with this Agreement not later than 18 months after the Property Control Date ("Opening Date").
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, construction of a free-standing Carls Jr. restaurant is considered to have commenced once the franchisee has obtained all required permits and has begun the installation of building footings with the intent to maintain continuous construction thereafter. This definition is important because the franchisee must commence construction within 6 months after the Property Control Date, or site acceptance may be withdrawn. The Property Control Date is the effective date of the lease or sublease, or the closing date of the purchase of the real property.
Carls requires franchisees to adhere to a strict timeline. Franchisees must begin construction within six months of securing property control. Failure to meet this deadline could result in the withdrawal of site acceptance. This clause emphasizes the importance of thorough preparation and efficient execution in the initial stages of development. Franchisees need to ensure all permits are in place and construction can start promptly to avoid potential setbacks.
Once construction has started, it must continue without interruption, except for events constituting Force Majeure, until completed. The restaurant must be ready to open for business no later than 18 months after the Property Control Date. This timeline highlights the importance of efficient project management and coordination to ensure timely completion and opening of the Carls Jr. restaurant.
Prospective franchisees should be aware of these construction requirements and timelines, as failure to comply may result in penalties or termination of the franchise agreement. It is crucial to have a well-defined construction plan and secure all necessary permits before the Property Control Date to ensure timely commencement of construction.