Does the Carls franchise agreement require the franchisee to warrant that they will not engage in terrorist activity?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Franchisee acknowledges that under applicable U.S. law, including, without limitation, Executive Order 13224, signed on September 23, 2001 ("Order"), CJR is prohibited from engaging in any transaction with any person engaged in, or with a person aiding any person engaged in, acts of terrorism, as defined in the Order. Accordingly, Franchisee represents and warrants to CJR that as of the date of this Agreement, neither Franchisee nor any person holding any ownership interest in Franchisee, controlled by Franchisee, or under common control with Franchisee is designated under the Order as a person with whom business may not be transacted by CJR, and that Franchisee: (1) does not, and hereafter shall not, engage in any terrorist activity; (2) is not affiliated with and does not support any individual or entity engaged in, contemplating, or supporting terrorist activity; and (3) is not acquiring the rights granted under this Franchise Agreement with the intent to generate funds to channel to any individual or entity engaged in, contemplating, or supporting terrorist activity, or to otherwise support or further any terrorist activity.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to the 2024 Carls Franchise Disclosure Document, the franchise agreement includes a clause regarding compliance with U.S. laws, specifically Executive Order 13224. This order prohibits Carls from engaging in transactions with individuals or entities involved in terrorism.
To ensure compliance, the Carls franchise agreement requires the franchisee to represent and warrant that, as of the agreement date, neither the franchisee nor anyone holding an ownership interest in the franchise is designated under the Executive Order as someone with whom Carls cannot do business. Furthermore, the franchisee must warrant that they will not engage in any terrorist activity, are not affiliated with or supporting anyone involved in terrorist activity, and are not acquiring the franchise rights to generate funds for terrorist activities.
This clause means a prospective Carls franchisee must affirm they are not involved in or supporting terrorism to be granted a franchise. This is a fairly standard clause in franchise agreements to ensure the franchisor complies with federal laws and regulations and to protect the brand's reputation.