How many Carls restaurants ceased operations for reasons other than termination, non-renewal, or reacquisition by the franchisor in 2022?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
to New Owners (Other than to CJR, Its Predecessor or Their Affiliates) For Fiscal Years 2022-2024(1) (2) ***
| State | Year | Number of Transfers | |---|---|---| | CA | 2022 | 0 | | | 2023 | 1 | | | 2024 | 0 | | UT | 2022 | 0 | | | 2023 | 1 | | | 2024 | 0 | | TOTAL | 2022 | 0 | | | 2023 | 2 | | | 2024 | 0 | *The Restaurants included in this table are also included in the preceding table.
Table No. 3 Status of Franchised Restaurants For Fiscal Years 2022-2024(1) (2)
| State | Year | Restaurants at Start of the Year | Restaurants Opened | Terminations | Non- Renewals | Reacquired by Franchisor | Ceased Operations – Other Reasons | Restaurants at End of the Year |
|---|---|---|---|---|---|---|---|---|
| AK | 2022 | 4 | 0 | 0 | 0 | 0 | 0 | 4 |
Source: Item 20 — OUTLETS AND FRANCHISEE INFORMATION (FDD pages 72–79)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a total of 68 restaurants ceased operations for reasons other than termination, non-renewal, or reacquisition by the franchisor during the fiscal year 2022. This number is derived from summing the 'Ceased Operations – Other Reasons' column for the year 2022 across multiple states, as detailed in the provided tables. Specifically, the states listed show the following figures for 'Ceased Operations – Other Reasons' in 2022: CA (31 in one table and 10 in another), CO (4), LA (3), NV (1), OK (2), UT (18). The FDD also provides a total of 12 for one set of restaurants and 56 for another set of restaurants. Note (1) states that the numbers for 2022 through 2024 are as of the fiscal year end, which runs from the Tuesday subsequent to the last Monday in January through the last Monday in January of the next calendar year.
This information is crucial for potential franchisees as it provides insight into the stability and potential risks associated with the Carls franchise. A high number of closures for 'other reasons' might indicate underlying issues with the business model, market conditions, or franchisee support. It is important to note that these 'other reasons' are not defined in the FDD, so a prospective franchisee should ask Carls for more details.
It is also important to note that the tables provide data for different sets of restaurants (possibly differentiated by market or franchise agreement terms), so the total number of closures is not simply the sum of all 'Ceased Operations – Other Reasons' figures listed. The FDD provides a total of 12 for one set of restaurants and 56 for another set of restaurants. Therefore, the total number of Carls restaurants that ceased operations for reasons other than termination, non-renewal, or reacquisition by the franchisor in 2022 is 68.
Prospective franchisees should investigate the reasons behind these closures and evaluate whether these risks are manageable. Further due diligence, including speaking with current and former franchisees, is strongly recommended to gain a comprehensive understanding of the factors contributing to these closures and the overall health of the Carls franchise system.