If a court finds a provision of the Carls franchise agreement unreasonable, what happens to the franchisee's duty within that provision?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- C. Franchisee expressly agrees to be bound by any promise or covenant imposing the maximum duty permitted by law that is subsumed within the terms of any provision of this Agreement, as though it were separately articulated in and made a part of this Agreement, that may result from striking from any of the provisions of this Agreement any portion or portions which a court may hold to be unreasonable and unenforceable in a final decision to which CJR is a party, or from reducing the scope of any promise or covenant to the extent required to comply with such a court order.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to the 2024 Carls FDD, if a court determines any portion of the franchise agreement to be unreasonable or unenforceable in a final decision, the franchisee is still expected to fulfill the maximum duty permitted by law within that provision. This means that even if a specific term is deemed too restrictive, the franchisee is bound to adhere to the greatest extent of the obligation that the law allows.
This clause ensures that Carls franchisees remain obligated to the fullest extent possible, even if certain provisions are challenged and modified by a court. It protects Carls's interests by preventing franchisees from completely escaping their responsibilities due to a single unenforceable term.
For a prospective Carls franchisee, this means understanding that even if a part of the agreement seems overly strict, a court ruling against it won't necessarily eliminate the obligation entirely. Instead, the franchisee will still be held to the maximum permissible duty under the law, which could still represent a significant commitment. It would be prudent to seek legal counsel to fully understand the implications of each provision and the potential scope of the 'maximum duty' requirement.