If a Carls franchisee relocates after losing possession of the original location, who is responsible for reimbursing the franchisor's expenses related to the new location acceptance?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
Our prior written consent is required before you relocate the Franchised Restaurant. If your right to possession of the Franchise Restaurant premises is lost through no act or failure to act on your part, you may relocate the Franchised Restaurant if: (1) we accept the new location; (2) you construct and equip a Franchised Restaurant at the new location in accordance with the then-current System standards and specifications; (3) a Franchised Restaurant at the new location is open to the public for business within 6 months after the loss of possession of the original franchised location; and (4) you reimburse us for all reasonable expenses actually incurred by us in connection with the acceptance of the new location.
Source: Item 12 — TERRITORY (FDD pages 54–56)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, if a franchisee loses possession of their restaurant premises through no fault of their own and chooses to relocate, the franchisee is responsible for reimbursing Carls for all reasonable expenses actually incurred by Carls in connection with the acceptance of the new location.
This means that while Carls allows for relocation under specific circumstances, the franchisee bears the financial burden of Carls's costs associated with approving the new site. These expenses could include travel, staff time, and third-party consultant fees that Carls incurs to evaluate and approve the new location.
For a prospective Carls franchisee, this highlights the importance of securing a stable and long-term lease for the initial location. It also underscores the need to have sufficient capital to cover potential relocation expenses should an unforeseen loss of premises occur. The franchisee must also ensure the new location meets Carls's standards and is open for business within six months of losing the original location.