What costs, liabilities, and expenses are assumed by the franchisee for developing, constructing, and equipping a Carls Jr. Restaurant?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
chased the real estate for the Franchised Location, Franchisee shall immediately upon execution of this Agreement provide CJR with a copy of the fully-signed lease or sublease, together with the executed Carl's Jr. Lease Addendum in the form attached as Appendix G. For purposes of this Agreement, the effective date of the lease or sublease, or the closing date of the purchase of the real property, shall be the "Property Control Date".
4. CONSTRUCTION OF THE FRANCHISED RESTAURANT
A. Development Training
Franchisee shall complete, to CJR's satisfaction, any development training required by CJR. Franchisee shall pay CJR, for each person attending development training, a tuition fee as established by CJR from time to time. Franchisee also may attend optional development training as offered by CJR from time to time, subject to payment of a tuition fee as established by CJR from time to time. Franchisee will be required to pay all travel, living and other expenses incurred by Franchisee and its employees while attending development training and optional development training.
B. Restaurant Development
Franchisee assumes all cost, liability and expense for developing, constructing and equipping the Franchised Restaurant. CJR will furnish to Franchisee prototypical plans and specifications for a Carl's Jr. Restaurant, including requirements for dimensions, design, image, interior layout, decor, fixtures, equipment, signs, furnishings, storefront and color scheme. It shall be Franchisee's responsibility to have prepared all required construction plans and specifications to suit the shape and dimensions of the Franchised Location and Franchisee must ensure that these plans and specifications comply with applicable ordinances, building codes and permit requirements and with lease requirements and restrictions. Franchisee shall use only registered architects, registered engineers, and professional and licensed contractors.
Franchisee shall submit proposed construction plans, specifications and drawings for the Franchised Restaurant ("Plans") to CJR and shall, upon CJR's request, submit all revised or "as built" Plans during the course of such construction. CJR will review the Plans and notify Franchisee within 30 days after CJR receives the Plans, or such longer period as CJR requires, whether the Plans are approved. CJR's approval shall not be unreasonably withheld. Once CJR has approved the Plans and Franchisee has signed
each page of the Plans acknowledging the approval and Franchisee's obligations for compliance, no substantial change shall be made to the Plans without the prior approval of CJR, which shall not be unreasonably withheld. If, in the course of construction, any such change in the Plans is contemplated, CJR's approval must first be obtained before proceeding. CJR shall approve or disapprove Plan changes within 10 business days after receipt.
Franchisee is prohibited from beginning site preparation or construction prior to receiving written notification from CJR that it has approved the Plans.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the franchisee assumes all costs, liabilities, and expenses associated with developing, constructing, and equipping their franchised restaurant. Carls will provide prototypical plans and specifications that include requirements for dimensions, design, image, interior layout, decor, fixtures, equipment, signs, furnishings, storefront, and color scheme.
Carls franchisees are responsible for preparing all required construction plans and specifications to suit the location's shape and dimensions, ensuring compliance with applicable ordinances, building codes, permit requirements, and lease restrictions. Franchisees must use registered architects, registered engineers, and professional and licensed contractors for this purpose.
The franchisee is also responsible for obtaining and maintaining all necessary permits and licenses, including building, utility, sign, health, sanitation, and business permits. They must construct all required improvements to the franchised location and decorate both the exterior and interior of the restaurant according to Carls's approved plans. Additionally, the franchisee must purchase or lease and install all specified and required fixtures, equipment, furnishings, and interior and exterior signs. The franchisee is also responsible for purchasing an opening inventory of authorized and approved products, materials, and supplies.
Carls requires that franchisees use only approved fixtures, furnishings, equipment, and signs that meet the brand's specifications for quality, design, appearance, function, and performance. Franchisees must purchase or lease these items from suppliers designated or approved by Carls. If a franchisee proposes to use any non-approved items, they must first submit them to Carls for approval, bearing all associated expenses. Carls will then decide whether to approve or disapprove the items.