What are the Carls franchisee's obligations regarding complying with environmental regulations, as potentially outlined in Item 9, and how does this relate to the restrictions on sources of cleaning supplies and waste disposal methods in Item 8?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
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Licenses; Permits; Applicable Laws; and Competition. It is your sole and absolute obligation to research all applicable federal, state and local laws and regulations governing the operation of your business and to ensure that such operation does not violate any federal, state or local law or regulation. For example, there are various federal laws that could affect your business and that you must comply with such as the American with Disabilities Act (ADA), the CAN-SPAM Act, the Telephone Consumer Protection Act (TCPA), the Telemarketing Sales Rule (TSR), and other federal and state anti-solicitation laws regulating marketing phone calls; and federal and state laws that regulate data security and privacy (including but not limited to the use, storage, transmission, and disposal of data regardless of media type). Further, you must comply with all local, state and federal laws and regulations applicable to the operation of your Restaurant, including
health, sanitation, food handling, food preparation, waste disposal, smoking restrictions and advertising and point-of-sale disclosures, including statements concerning the nutritional and dietary characteristics of the food served at your Restaurant. You should consult with your attorney concerning all laws and regulations that may affect your Restaurant operations.
In addition, all newly-developed Carl's Jr. Restaurants must contain a charbroiler. The charbroiler has been the subject of regulation in certain areas of the country, including California where, in some regions, chain-driven charbroilers must have catalytic converters. The possibility exists that other states may require that air pollution control equipment be installed in connection with the use of a charbroiler. You would be expected to comply with these regulations, if applicable to your Restaurant, and pay all costs of installation and maintenance of the control equipment.
The restaurant business, including the quick service segment, is highly competitive. You will be competing with other quick service restaurants, including national and regional restaurant chains, fastcasual restaurants, full-service casual-dining restaurants, budget restaurants, health and nutrition-oriented restaurants, delicatessens and prepared food restaurants, take-out food service companies, supermarkets, coffee shops and convenience stores. The ability of each Carl's Jr. Restaurant to compete depends on its location, ingress and egress, signage, parking, service, employee attitudes, overhead, changing local market and economic conditions and many other factors both within and outside your control.
The Franchisor and Its Predecessor. CJR is a Delaware limited liability company organized on January 30, 2013. Our principal place of business is 6700 Tower Circle, Suite 1000, Franklin, Tennessee 37067. Our agents for service of process in various states are listed in Exhibit B. We do business under the name "Carl's Jr.". We have operated and offered franchises for Carl's Jr. Restaurants since April 1, 2013. As of January 29, 2024, there were 49 company-operated Carl's Jr. restaurants and there were 1,014 domestic franchised Carl's Jr. restaurants, including 262 Dual Concept restaurants. Dual Concept Restaurants are quick service Carl's Jr. restaurants that also offer Green Burrito Mexican food products. In addition, as of January 29, 2024, there were the following international franchised Carl's Jr. Restaurants: American Samoa – 1; Australia – 47; Cambodia – 6; Canada – 20; Chile – 22; Denmark – 16; Dominican Republic – 1; Ecuador – 24; France – 7; Guatemala – 3; India – 4; Japan – 4; Malaysia – 6; Mexico – 377; New Zealand – 17; Nicaragua – 3; Panama – 10; People's Republic of China – 3; Puerto Rico – 2; Russia – 17; Singapore – 5; Spain – 44; Switzerland – 1; and Turkey – 22. (We consider American Samoa and Puerto Rico to be international locations even though they are U.S. territories.) We do not engage in any other business or offer franchises in any other line of business.
Our predecessor is Carl Karcher Enterprises, Inc., a California corporation incorporated on February 7, 1966, whose principal place of business was 6307 Carpinteria Avenue, Carpinteria, California 93013. On March 26, 2013, it was converted from a corporation to a limited liability company, Carl Karcher Enterprises LLC, a Delaware limited liability company formed on February 25, 2013. Effective October 7, 2013, Carl Karcher Enterprises LLC was converted to a California limited liability company. Carl Karcher Enterprises LLC has the same principal place of business as ours. (Carl Karcher Enterprises, Inc. and Carl Karcher Enterprises LLC will be collectively referred to in this disclosure document as "CKE".) CKE operated Carl's Jr. Restaurants from 1966 until March 31, 2013.
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, franchisees bear the responsibility of adhering to all relevant federal, state, and local laws and regulations governing their restaurant's operation. This encompasses a broad spectrum of compliance areas, including health, sanitation, food handling and preparation, waste disposal, and smoking restrictions. Franchisees are expected to conduct thorough research to ensure their Carl's Jr. restaurant operates in accordance with all applicable laws and regulations. Carls also requires franchisees to secure and maintain all necessary licenses, permits, and certificates.
Carls places specific emphasis on compliance with waste disposal regulations. Item 8 outlines that franchisees must adhere to Carls's standards and specifications for cleaning supplies. These standards are detailed in the Operation Procedures Manual (OPM). Franchisees are required to purchase cleaning supplies from approved suppliers, which are listed by the Quality Assurance Department upon written request. The master distributor, Distribution Market Advantage ("DMA"), carries items such as paper and cleaning supplies. Carls retains the right to modify the list of approved suppliers and master distributors.
Furthermore, Carls highlights the importance of environmental regulations concerning newly-developed restaurants that contain a charbroiler. In certain regions, particularly in California, chain-driven charbroilers are mandated to have catalytic converters. The FDD states that other states may also implement similar air pollution control equipment requirements. Franchisees are expected to comply with these regulations, including covering all costs associated with the installation and maintenance of the required control equipment. This underscores the franchisee's responsibility to stay informed about and comply with environmental regulations specific to their restaurant's location and equipment.