Does the Carls franchisee have an opportunity to cure a breach if they transfer without consent?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Except as otherwise provided in this Agreement, any purported Transfer, by operation of law or otherwise, not having the prior written consent of CJR shall be null and void and shall constitute a material breach of this Agreement, for which CJR may terminate this Agreement without providing Franchisee an opportunity to cure the breach.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to the 2024 Carls Franchise Disclosure Document, a franchisee does not have the opportunity to cure a breach if they transfer any interest in the franchise without prior written consent from Carls. Carls considers such an unapproved transfer a material breach of the franchise agreement, which allows Carls to terminate the agreement immediately.
This policy underscores the importance Carls places on controlling who becomes a franchisee. The brand wants to ensure that all franchisees meet their standards for business skill, financial capacity, personal character, and operational ability. Requiring consent for transfers allows Carls to vet potential new franchisees and maintain consistency across the brand.
However, Carls does allow some transfers without prior consent if certain conditions are met. These include transfers of 20% or less of ownership interest to the Continuity Group (those who retain at least 66% ownership after the transfer), or transfers to immediate family members or the Continuity Group following the death or incapacitation of an owner. These exceptions require written notice to Carls 30 days in advance, adherence to Section 16 requirements, and the franchisee must not be in default of any agreements with Carls at the time of the notice.