What are all the fees Carls charges a franchisee, considering both Item 5 and Item 6?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Carl’s Jr. Renewal Fee | $5,000 for a renewal term of 5 years or less or $10,000 for a renewal term greater than 5 years, but no more than 10 years | At the time the new franchise agreement is signed | |
| Collection Costs and Expenses | CJR’s costs and expenses | On demand, if required | These costs and expenses include, but are not limited to, costs and commissions due a collection agency, reasonable attorneys’ fees, costs incurred in creating or replicating reports demonstrating Gross Sales of the Franchised Restaurant, court costs, expert witness fees, discovery costs and reasonable attorneys’ fees and costs on appeal, together with interest charges on all of the foregoing. |
| Relocation | CJR’s reasonable expenses | On demand, if required | You may not relocate the Franchised Restaurant without CJR’s prior written consent, which may be withheld by CJR in its sole discretion. If we approve a relocation of your Franchised Restaurant, we have the right to charge you for all reasonable expenses actually incurred in connection with consideration of the request. |
| Reimbursement of Insurance Costs | Cost of obtaining coverage | Immediately upon receipt of invoice | If you fail to procure or maintain the required insurance, we may procure the insurance and charge its cost along with our out-of-pocket expenses to you. We collect the cost of the insurance coverage for the insurance company with which we place the coverage. |
| Web Site Fee | Actual cost of developing, reviewing, securing, protecting and/or hosting the web site | As incurred | CJR has the right to charge you a fee for developing, reviewing and approving your web site and/or securing, protecting and hosting the web site. |
What This Means (2024 FDD)
According to the 2024 FDD, Carls outlines several fees franchisees may encounter. Item 5 details the initial fees, while Item 6 lists other fees that may arise during the franchise term.
Under Item 6, Carls franchisees may be charged a Carl’s Jr. Renewal Fee of $5,000 for a renewal term of 5 years or less, or $10,000 for a renewal term greater than 5 years, but no more than 10 years. This fee is due at the time the new franchise agreement is signed. Franchisees may also face collection costs and expenses, covering costs and commissions due to collection agencies, attorney's fees, costs for replicating gross sales reports, court costs, expert witness fees, discovery costs, and interest charges. These collection costs are due on demand if required.
Additional fees include relocation expenses, which cover Carls' reasonable expenses if a franchisee relocates their restaurant with Carls' approval. Franchisees may also be charged for reimbursement of insurance costs if they fail to maintain the required insurance coverage, with payment due immediately upon receipt of the invoice. Furthermore, Carls may charge a web site fee for developing, reviewing, securing, protecting, and/or hosting the franchisee's web site, with the fee being the actual cost incurred.
Prospective franchisees should carefully review both Item 5 and Item 6 of the FDD to fully understand all potential fees and their respective conditions and payment schedules. Understanding these fees is crucial for accurate financial planning and assessing the overall investment required to operate a Carls franchise.