factual

What expenses does the document mention that a franchisee may incur while operating a Carls Jr. Restaurant?

Carls Franchise · 2024 FDD

Answer from 2024 FDD Document

Franchisee agrees, at its sole expense, to do or cause to be done the following, by the Opening Date:

  • (1) Obtain and maintain all required building, utility, sign, health, sanitation, business and other permits and licenses applicable to the Franchised Restaurant.
  • (2) Construct all required improvements to the Franchised Location and decorate the exterior and interior of the Franchised Restaurant in compliance with the Plans approved by CJR.
  • (3) Purchase or lease and install all specified and required fixtures, equipment, furnishings and interior and exterior signs required for the Franchised Restaurant.

(4) Purchase an opening inventory for the Franchised Restaurant of only authorized and approved products and other materials and supplies.

Franchisee shall constantly maintain and continuously operate the Franchised Restaurant and all furniture, fixtures, equipment, furnishings, floor coverings, interior and exterior signage, the building interior and exterior, interior and exterior lighting, landscaping and parking lot surfaces in first-class condition and repair in accordance with the requirements of the System, including all ongoing necessary remodeling, redecorating, refurbishing and repairs. In addition, Franchisee shall promptly and diligently perform all necessary maintenance, repairs and replacements to the Franchised Restaurant as CJR may prescribe from time to time including periodic interior and exterior painting; resurfacing of the parking lot; roof repairs; and replacement of obsolete or worn out signage, floor coverings, furnishings, equipment and decor.

During the term of this Agreement, Franchisee shall have a weekly advertising and promotion obligation ("APO") in the amount set forth in Section 6.C. and Appendix C. Following written notice to Franchisee, CJR may modify the amount and allocation of the APO subject to the provisions of Section 8.F. Franchisee shall pay, at the same time and in the same manner as the royalty fee, that portion of the APO as CJR may direct to the Production Fund in accordance with Section 8.B. The remainder of the APO shall be paid, at the same time and in the same manner as the royalty fee, to the Media Fund in accordance with Section 8.C.

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.

If Franchisee fails to provide CJR on a timely basis with the records, reports and other information required by this Agreement or, upon request of CJR, with copies of same, CJR or its designee shall have access at all reasonable times (and as often as necessary) to Franchisee's books and records for the purpose, among other things, of preparing the required records, reports and other information. Franchisee promptly shall reimburse CJR or its designee for all costs and expenses associated with CJR obtaining such records, reports or other information.

Source: Item 22 — CONTRACTS (FDD page 80)

What This Means (2024 FDD)

According to Carls's 2024 Franchise Disclosure Document, franchisees incur several expenses while operating a Carls Jr. Restaurant. These include maintaining the restaurant in first-class condition, encompassing ongoing remodeling, redecorating, refurbishing, and repairs. Franchisees must also perform necessary maintenance, repairs, and replacements as prescribed by Carls, such as periodic painting, parking lot resurfacing, roof repairs, and replacement of obsolete signage, floor coverings, furnishings, equipment, and decor.

Additionally, franchisees have a weekly advertising and promotion obligation (APO), a portion of which is directed to the Production Fund for advertising and marketing programs, and the remainder to the Media Fund. Franchisees are also responsible for costs associated with attending development training, including tuition fees, travel, and living expenses.

Carls franchisees must also cover costs related to obtaining and maintaining required permits and licenses, constructing improvements to the location, purchasing or leasing fixtures, equipment, furnishings, and signs, and purchasing an opening inventory of approved products and materials. If a franchisee fails to provide required records, Carls may access the franchisee's books and records and the franchisee must reimburse Carls for all associated costs and expenses.

Disclaimer: This information is extracted from the 2024 Franchise Disclosure Document and is provided for research purposes only. It does not constitute legal or financial advice. Consult with a franchise attorney before making any investment decisions.