What happens if the sales price of a Carls franchise is too high, in CJR's judgment?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
(2) If the Transfer is a sale, the sales price shall not be so high, in CJR's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurant and meet financial obligations to CJR, third party suppliers and creditors.
CJR's decision with respect to a proposed Transfer shall not create any liability on the part of CJR: (a) to the transferee, if CJR consents to the Transfer and the transferee experiences financial difficulties; or (b) to Franchisee or the proposed transferee, if CJR withholds consent to the Transfer.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if a franchisee proposes to transfer their franchise, Carls (referred to as CJR in the document) assesses the proposed sales price. If CJR believes the sales price is too high, it could jeopardize the new franchisee's ability to successfully operate the Carl's Jr. restaurant.
Specifically, CJR evaluates whether the high sales price might negatively impact the transferee's capacity to develop, maintain, operate, and promote the franchised restaurant. It also considers if the price would hinder the transferee's ability to meet their financial obligations to Carls, third-party suppliers, and creditors.
This evaluation is part of CJR's broader discretion in approving or denying a proposed transfer. The FDD states that CJR's decision regarding a transfer does not create any liability for CJR, either to the transferee if they experience financial difficulties after the transfer or to the franchisee or proposed transferee if CJR withholds consent for the transfer.