If a Carls franchisee owns the Franchised Location, what are CJR's options regarding the property?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- K. If Franchisee owns the Franchised Location, CJR, at its option, will either purchase the fee simple interest or, upon purchase of the other Assets, enter into a standard lease with Franchisee on terms comparable to those for which similar commercial properties in the area are then being leased.
The initial term of this lease with Franchisee shall be at least 10 years with 4 options to renew of 5 years each and the rent shall be the fair market rental value of the Franchised Location.
If Franchisee and CJR cannot agree on the fair market rental value of the Franchised Location, the appraisers (selected in the manner described in Section 2325.D.) shall determine the rental value.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if a franchisee owns the location of their Carls restaurant, CJR has the option to either purchase the property outright or enter into a standard lease agreement with the franchisee if CJR purchases the other assets of the business.
If Carls chooses to lease the property, the terms will be comparable to those of similar commercial properties in the area. The initial lease term will be at least 10 years, with four renewal options of 5 years each. The rent will be the fair market rental value of the location.
In the event that the franchisee and Carls cannot agree on the fair market rental value, the rental value will be determined by appraisers selected as described in Section 2325.D of the franchise agreement.