What happens if a Carls franchisee fails to make the required alterations and modifications to the Franchised Location upon termination?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- F. Unless CJR directs Franchisee to temporarily maintain the existing appearance of the Franchised Location while CJR determines if it will exercise its option under Section 23, Franchisee
promptly shall make such alterations and modifications to the Franchised Location as may be necessary to clearly distinguish to the public the Franchised Location from its former appearance and also make those specific additional changes as CJR may request for that purpose. If Franchisee fails to promptly make these alterations and modifications, CJR shall have the right (at Franchisee's expense, to be paid upon Franchisee's receipt of an invoice from CJR) to do so without being guilty of trespass or other tort.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if a franchisee fails to promptly make the alterations and modifications necessary to distinguish the Franchised Location from its former appearance after termination, Carls has the right to make those alterations and modifications themselves. The franchisee is responsible for covering these expenses, which must be paid upon receipt of an invoice from Carls. This ensures that the location no longer appears to be a Carls restaurant, protecting the brand's image and preventing public confusion.
This provision is important for prospective franchisees as it highlights the financial responsibility for post-termination modifications. Franchisees need to be aware that they cannot simply abandon the location without making the required changes. Failing to do so will result in Carls stepping in and charging the franchisee for the work. This could potentially lead to unexpected expenses at the end of the franchise agreement.
It is a fairly standard practice in franchising to require franchisees to de-identify a location after termination to protect the brand. The Carls franchise agreement outlines a clear process for this, including the potential for Carls to take over the modifications at the franchisee's expense. Franchisees should carefully review the terms of the franchise agreement to fully understand their obligations upon termination.