Is a Carls franchisee required to participate in all advertising, marketing, promotions, research, and public relations programs instituted by the Production Fund?

According to Carls's 2024 Franchise Disclosure Document, franchisees are required to participate in all advertising, marketing, promotions, research, and public relations programs instituted by the Production Fund. The Production Fund is used for the creation and development of advertising, marketing, social media and public relations, research and related programs, gift card and loyalty programs, activities and materials that Carls deems appropriate.

CJR (Carls Jr. Restaurants) has sole discretion over the creative concepts, materials, and endorsements used in these programs, as well as the geographic, market, and media placement and allocation of advertising and marketing materials. The Production Fund can be used to cover various costs, including video, audio, and written advertising materials, employing advertising or activation agencies, administering regional and multiregional advertising programs, purchasing direct mail, in-app support for third-party delivery platforms, and supporting public relations and market research.

This mandatory participation ensures brand consistency and coordinated marketing efforts across all Carls locations. However, Carls is not liable to ensure that expenditures by the fund in or affecting any geographic area are proportionate or equivalent to the contributions to the fund by Carls restaurants operating in that geographic area, or that any Carls restaurant will benefit directly or in proportion to its contribution. This means that while franchisees must contribute to and participate in the Production Fund's programs, there is no guarantee of a direct or proportionate return on investment in their specific market area.