How long is the Due Diligence Period that Carls has to conduct investigations after the date of Carls' Purchase Notice?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- G. For a period of 30 days after the date of CJR's Purchase Notice ("Due Diligence Period"), CJR shall have the right to conduct such investigations as it deems necessary and appropriate to determine: (1) the ownership, condition and title of the Assets; (2) liens and encumbrances on the Assets; (3) environmental and hazardous substances at or upon the Franchised Location; and (4) the validity of contracts and liabilities inuring to CJR or affecting the Assets, whether contingent or otherwise.
Franchisee will afford CJR and its representatives access to the Franchised Restaurant and the Franchised Location at all reasonable times for the purpose of conducting inspections of the Assets; provided that such access does not unreasonably interfere with Franchisee's operation of the Franchised Restaurant.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, the Due Diligence Period lasts for 30 days after the date of CJR's Purchase Notice. During this period, CJR (Carls) has the right to conduct investigations to assess various aspects of the assets. These investigations include determining the ownership, condition, and title of the assets, identifying any liens and encumbrances, assessing environmental and hazardous substances at the franchised location, and verifying the validity of contracts and liabilities affecting the assets.
During the Due Diligence Period, Carls also has the option to examine the title to real estate assets through a nationally recognized title company and conduct lien searches on other assets. They can also procure "AS BUILT" surveys of the real estate assets, conduct environmental assessments and testing, and inspect the leasehold improvements, equipment, vehicles, furnishings, fixtures, signs, and inventory to ensure they are in satisfactory working condition.
Prior to the end of the 30-day Due Diligence Period, Carls must notify the franchisee in writing of any objections they have based on the findings from the title or lien search, survey, environmental assessment, or inspection. If the franchisee is unable or unwilling to correct any title defect, environmental issue, or defect in the working condition of the fixed assets, Carls has the option to either accept the assets as they are or rescind their option to purchase them before the closing.