What factors are considered when Carls determines the Development Territory in the Development Agreement?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
If you sign a Development Agreement, you will receive a Development Territory, which will be mutually agreed upon by CJR and you, taking into consideration the density of the area and the number of Franchised Restaurants you agree to develop. A description of the Development Territory will be attached as an appendix to the Development Agreement. The perimeters of the Development Territory may be described by specific street boundaries, county lines, state lines, municipal boundaries, railroad tracks or other similar boundary descriptions, and the size may range from a portion of a metropolitan area to a county or a state in less densely populated areas. You must obtain our prior written acceptance of each site for a Franchised Restaurant, which will be based on our then-current standards for sites for Carl's Jr.
Source: Item 12 — TERRITORY (FDD pages 54–56)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the Development Territory granted in the Development Agreement is determined through mutual agreement between CJR and the franchisee. The key factors considered in defining the territory are the density of the area and the number of Franchised Restaurants the franchisee commits to developing.
The Development Territory's boundaries can be described using specific street boundaries, county lines, state lines, municipal boundaries, or railroad tracks. The size of the territory can vary significantly, ranging from a portion of a metropolitan area to an entire county or even a state in less densely populated regions. This flexibility allows Carls to tailor the territory size to the specific characteristics of the market and the franchisee's development capabilities.
It is important to note that while the Development Territory is defined, Carls requires prior written acceptance of each specific site for a Franchised Restaurant. This acceptance is based on Carls's then-current standards for sites. This means that even within the agreed-upon Development Territory, Carls retains control over the specific locations where restaurants can be opened, ensuring they meet the brand's criteria for success. Prospective franchisees should carefully consider these factors and discuss them thoroughly with Carls to ensure a clear understanding of the Development Territory and site approval process.