Can a Carls franchisee operate the franchised restaurant at a location different from the franchised location?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
This Agreement does not give Franchisee any exclusive rights to use the System or the Proprietary Marks in any geographic area. Nothing in this Agreement prohibits CJR from, among other things: (1) operating or licensing others to operate at any location, during or after the term of this Agreement, any type of restaurant other than Carl's Jr. Restaurants; (2) operating or licensing others to operate, during the term of this Agreement, Carl's Jr. Restaurants at any location other than the Franchised Location; (3) operating or licensing others to operate, after this Agreement terminates or expires, Carl's Jr. Restaurants at any location, including the Franchised Location; and (4) merchandising and distributing goods and services identified by the Proprietary Marks at any location through any other method or channel of distribution. CJR reserves to itself all rights to use and license the System and the Proprietary Marks other than those expressly granted under this Agreement.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a franchisee cannot operate a Carl's Jr. restaurant at a location other than the franchised location during the term of the agreement. The agreement explicitly states that Carls is not prohibited from operating or licensing others to operate Carl's Jr. Restaurants at any location other than the Franchised Location during the term of the agreement. However, after the agreement terminates or expires, Carls reserves the right to operate or license others to operate Carl's Jr. Restaurants at any location, including the Franchised Location.
This means that while the franchise agreement is in effect, the franchisee is restricted to the specific location outlined in the agreement. This protects the franchisee's investment to some extent by preventing Carls from opening another franchise nearby. However, Carls retains the right to establish other franchises in the vicinity, as long as they are not at the franchisee's specific location during the agreement term.
This clause is fairly standard in franchising, as franchisors typically want the flexibility to expand their brand's presence. However, it's important for prospective Carls franchisees to understand that their exclusive operating territory is limited to the specific franchised location during the term of the agreement. After the agreement ends, Carls has even more freedom regarding location, which could impact the franchisee if they choose not to renew or if the agreement is terminated.