If a Developer sells a Carls Franchised Restaurant developed under the Development Agreement, does it still count towards meeting the Development Schedule obligations?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
If, during the Development Term, Developer sells a Franchised Restaurant that was developed pursuant to this Agreement, that Franchised Restaurant will continue to be counted as a Franchised Restaurant for the purpose of meeting Developer's obligations under the Development Schedule, provided that the sale has been consented to by CJR and only so long as that restaurant continues to be operated pursuant to a franchise agreement with CJR or its affiliates.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a Franchised Restaurant developed under the Development Agreement that is later sold by the Developer can still count towards meeting the Development Schedule obligations. However, this is conditional.
Specifically, the sale must be consented to by Carls. Additionally, the restaurant must continue to be operated under a franchise agreement with Carls or its affiliates. This means that if the new owner ceases to operate the restaurant as a Carls franchise, it will no longer count toward the Developer's obligations under the Development Schedule.
This provision ensures that Carls maintains control over its brand and standards, even when a developed restaurant changes ownership. For a prospective Carls developer, this clause provides some flexibility in managing their assets while still being accountable for fulfilling the Development Schedule outlined in their agreement.