Following the termination of a Carls franchise agreement, what actions must the franchisee take regarding the Proprietary Marks?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
E. Franchisee immediately shall discontinue all use of the Proprietary Marks in connection with the Franchised Restaurant and of any and all items bearing the Proprietary Marks; remove the Proprietary Marks from the Franchised Restaurant and from clothing, signs, materials, motor vehicles and other items owned or used by Franchisee in the operation of the Franchised Restaurant (unless CJR directs Franchisee to temporarily refrain from doing so while CJR determines if it will exercise its option under Section 23); cancel all advertising for the Franchised Restaurant that contains the Proprietary Marks (including telephone directory listings); and take such action as may be necessary to cancel any filings or registrations for the Franchised Restaurant that contain any Proprietary Marks.
F. Unless CJR directs Franchisee to temporarily maintain the existing appearance of the Franchised Location while CJR determines if it will exercise its option under Section 23, Franchisee
promptly shall make such alterations and modifications to the Franchised Location as may be necessary to clearly distinguish to the public the Franchised Location from its former appearance and also make those specific additional changes as CJR may request for that purpose. If Franchisee fails to promptly make these alterations and modifications, CJR shall have the right (at Franchisee's expense, to be paid upon Franchisee
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, after the termination of the franchise agreement, the franchisee must immediately cease all use of Carls's Proprietary Marks in connection with the Franchised Restaurant. This includes discontinuing the use of the marks on any items bearing them.
The franchisee is obligated to remove the Proprietary Marks from the Franchised Restaurant itself, as well as from clothing, signs, materials, motor vehicles, and any other items used in the operation of the restaurant. The franchisee must also cancel all advertising for the Franchised Restaurant that contains the Proprietary Marks, including telephone directory listings, and take any necessary actions to cancel filings or registrations for the Franchised Restaurant that include any Proprietary Marks.
However, Carls may direct the franchisee to temporarily refrain from removing the Proprietary Marks while Carls determines whether it will exercise its option to take over the location. Unless otherwise directed by Carls, the franchisee must promptly alter and modify the Franchised Location to clearly distinguish it from its former appearance and make any additional changes requested by Carls for that purpose. If the franchisee fails to do so, Carls has the right to make these alterations and modifications at the franchisee's expense.