Does the Carls franchise agreement confer any rights or remedies to individuals or entities other than the Developer, CJR, and their affiliates, heirs, successors, and assigns?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
With respect to 10% Owners, Developer acknowledges that, unless otherwise agreed to in writing by CJR, it is CJR's intent to have individuals (and not corporations, limited liability companies or other entities) execute the Guarantee. Accordingly, if any 10% Owner is not an individual, CJR shall have the right to have the Guarantee executed by individuals who have only an indirect ownership interest in Developer and their spouses, if applicable. (By way of example, if a 10% Owner of Developer is a corporation, CJR has the right to require that the Guarantee be executed by individuals who have an ownership interest in that corporation and their spouses, if applicable.)
If Developer, any guarantor or any parent, subsidiary or affiliate of Developer holds any interest in other restaurants that are franchised by CJR or its affiliates, the party who owns that interest shall execute, concurrently with this Agreement, a form of cross-guarantee to CJR and its affiliates for the payment of all obligations for such restaurants, unless waived in writing by CJR in its sole discretion. For purposes of this Agreement, an affiliate of Developer is any company controlled, directly or indirectly, by Developer or Developer's parent or subsidiary.
CJR TR Development Agreement – 5/24
Franchisee (Alpha Code)
DMA/Area of Development – Number of Restaurants
F. Development Principal
Developer shall designate and retain an individual to serve as the Development Principal. (If Developer is owned by one individual, that individual may serve as the Development Principal if the individual meets CJR's requirements for a Development Principal.) The Development Principal as of the date of this Agreement is identified in Appendix C. The Development Principal shall meet all of the following qualifications:
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
Based on the 2024 Carls Franchise Disclosure Document, the franchise agreement primarily outlines rights and obligations between the Developer (franchisee) and CJR (Carls). However, there are some stipulations that involve other parties.
The agreement includes provisions related to guarantors, who may be required to execute guarantees, especially if the Developer is not an individual. In such cases, Carls may require individuals with an indirect ownership interest in the Developer to execute the guarantee. These guarantors, along with the Developer, provide a general release to CJR and its affiliates, which means they waive their rights to sue CJR under certain conditions. However, this release does not extend to claims arising from misrepresentations in the Franchise Disclosure Document or violations of franchise laws.
Furthermore, the agreement stipulates that no director, officer, employee, or agent of CJR will be liable for any obligations or liabilities of CJR related to the agreement or any claims against CJR arising from the relationship between the Developer and CJR. This provision limits the liability of individuals associated with Carls. In summary, while the agreement is primarily between Carls and the Developer, it does have implications for guarantors and individuals associated with CJR, defining their rights, obligations, and potential liabilities.