If a Developer or its affiliate holds an interest in other restaurants franchised by CJR or its affiliates, what action is required concurrently with the Carls Development Agreement, and under what condition can this action be waived?

According to the 2024 Carls FDD, if a developer, any guarantor, or any parent, subsidiary, or affiliate of the developer holds an interest in other restaurants franchised by CJR or its affiliates, the party who owns that interest must execute a form of cross-guarantee to CJR and its affiliates. This cross-guarantee covers the payment of all obligations for such restaurants.

In simpler terms, this means that if you or any related business entity has a financial stake in other Carls franchises, you'll need to provide a guarantee that ensures all financial obligations across those franchises are met. This is a way for Carls to protect its financial interests and ensure that all franchisees within its system are accountable for their financial commitments.

However, this requirement can be waived by Carls in its sole discretion, meaning Carls has the authority to decide whether or not to enforce this cross-guarantee requirement. This waiver must be provided in writing to be valid. This provides Carls with flexibility in specific situations, but it also means that as a prospective developer, you should be prepared to provide this cross-guarantee unless you receive explicit written confirmation of a waiver from Carls.