If the Carls franchisee is an individual, what is the extent of their liability regarding the Franchise Agreement?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
If Franchisee is an individual, or a partnership comprised solely of individuals, Franchisee makes the following additional representations and warranties: (A) each individual has executed this Agreement; (B) each individual shall be jointly and severally bound by, and personally liable for the timely and complete performance and a breach of, each and every provision of this Agreement; and (C) notwithstanding any transfer for convenience of ownership, pursuant to Section 18.D., each individual shall continue to be jointly and severally bound by, and personally liable for the timely and complete performance and a breach of, each and every provision of this Agreement.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if the franchisee is an individual, they are fully liable for the Franchise Agreement. Specifically, each individual franchisee must execute the Franchise Agreement and is jointly and severally bound by, and personally liable for, the timely and complete performance and any breach of every provision within the agreement. This obligation remains even if there's a transfer of ownership for convenience.
This means that each individual franchisee is responsible for ensuring all aspects of the agreement are fulfilled. If there are multiple individual franchisees (a partnership), each one is fully responsible, meaning Carls can seek full compensation or performance from any one of them, regardless of how they've divided responsibilities internally.
This clause protects Carls by ensuring that there is always a directly liable party responsible for upholding the Franchise Agreement. Prospective franchisees should carefully consider this unlimited personal liability and seek legal counsel to fully understand the implications before entering into a franchise agreement with Carls.