What happens if I don't pay amounts due when transferring my Carls franchise?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
e are no restrictions on our right to assign. | | | k. "Transfer" by you defined | Section 18.A. | Includes sale, assignment, transfer, conveyance, gift, pledge, mortgage or other encumbrance of any direct or indirect interest in you, the Franchise Agreement, the Franchise, the Franchised Restaurant, the assets of the Franchised Restaurant, the Franchised Location or any other assets pertaining to your operations under the Franchise Agreement. |
| Provision | Section In Franchise Agreement | Summary | |
|---|---|---|---|
| l. | Our approval of transfer by you | Sections 18.B & 8.G. | Unless otherwise expressly permitted, you must obtain our prior written consent for any Transfer (as defined in the Franchise Agreement). |
| m. Conditions for our approval of transfer | Sections 18.BC. | Conditions include: transferee qualified; reasonable sales price; payment of amounts due; no default under any agreement with CJR or its affiliates; |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 61–66)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if you fail to pay all outstanding amounts due to Carls, you will not be able to transfer your franchise. Carls's approval of a transfer of your franchise is conditional upon you fulfilling all your financial obligations to them.
Specifically, the FDD states that one of the conditions for Carls's approval of a franchise transfer is the "payment of amounts due." This means that before Carls will allow you to transfer your franchise to a new owner, you must ensure that all outstanding payments, fees, royalties, or any other financial obligations to Carls are fully satisfied.
This requirement is a standard practice in franchising, as franchisors want to ensure that franchisees are in good financial standing before transferring the business to someone else. It protects the integrity of the brand and the financial interests of the franchisor. Therefore, if you are considering selling your Carls franchise, it is crucial to settle all outstanding debts with Carls to facilitate the transfer process.