What monetary obligations must be satisfied before transferring a Carls franchise?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- (3) All of Franchisee's accrued monetary obligations to CJR and its affiliates (whether arising under this Agreement or otherwise) and all other outstanding obligations related to the Franchised Restaurant (including, but not limited to, bills from suppliers, taxes, judgments and any required governmental reports, returns, affidavits or bonds) have been satisfied or, in the reasonable judgment of CJR, adequately provided for.
CJR reserves the right to require that a reasonable sum of money be placed in escrow to ensure that all of these obligations are satisfied.
C. If CJR consents to a proposed Transfer, prior to the Transfer becoming effective:
(1) The transferor shall pay CJR a nonrefundable Transfer fee in an amount not to exceed $2,500 per Franchised Restaurant in connection with CJR's review of the Transfer application.
(3) The transferor shall remain liable for all obligations to CJR incurred before the date of the Transfer and shall execute any and all instruments reasonably requested by CJR to evidence that liability.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a franchisee looking to transfer their franchise must first satisfy several monetary obligations. Specifically, all accrued monetary obligations to Carls and its affiliates must be paid. This includes obligations arising from the Franchise Agreement or any other agreement.
In addition to these payments, all other outstanding obligations related to the franchised restaurant must be satisfied or adequately provided for, in Carls's reasonable judgment. These obligations include, but are not limited to, bills from suppliers, taxes, judgments, and any required governmental reports, returns, affidavits, or bonds. Carls reserves the right to require that a reasonable sum of money be placed in escrow to ensure that all of these obligations are satisfied.
Furthermore, if Carls consents to the transfer, the transferor must pay Carls a nonrefundable transfer fee, which will not exceed $2,500 per franchised restaurant, to cover the costs of reviewing the transfer application. The transferor remains liable for all obligations to Carls incurred before the date of the transfer and must execute any instruments reasonably requested by Carls to evidence that liability.