What is the nature of the agreement that Guarantors enter into with Carl's Jr. Restaurants LLC?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| In consideration of, and as an inducement to, the execution of the Carl's Jr. Restaurant Franchise | |||||
|---|---|---|---|---|---|
| Agreement dated as of ("Agreement") by Carl's Jr. Restaurants LLC ("CJR"), | |||||
| entered | into | with | ("Franchisee"), the undersigned ("Guarantors"), each of whom is a member of Franchisee's Continuity Group or a 10% Owner, or the spouse thereof, hereby personally and unconditionally agree as follows: |
- **3.
General Release.** Except as set forth in this Section 3, each Guarantor (if an individual, on behalf of him/herself and his/her heirs, representatives, successors and assigns, and if a business entity, on behalf of itself and its parent, subsidiaries and affiliates) (each a "Releasor" and collectively, "Releasors"), freely and without any influence forever release and covenant not to sue CJR, its parents, subsidiaries, affiliates, predecessors and successors and their respective past and present officers, directors, managers, shareholders, members, agents and employees, in their corporate and individual capacities (collectively, "CJR Releasees"), from any and all claims, demands, liabilities and causes of action of whatever kind or nature, whether known or unknown, vested or contingent, suspected or unsuspected (collectively "claims"), which any Releasor now owns or holds or may in the future own or hold based on, arising out of or relating to, in whole or in part, any fact, event, conduct or omission occurring on or before the date of this Guarantee, including, without limitation, claims arising under federal, state and local laws, rules and ordinances, claims for contribution, indemnity and/or subrogation, and claims arising out of, or relating to the Agreement and all other agreements between any Releasor and any CJR Releasee, the sale of a franchise to any Releasor, the development of any Franchised Restaurant and the development and operation of all other restaurants operated by any Releasor that are or were franchised by CJR or its parents, subsidiaries, affiliates or predecessors.
Each Guarantor (on behalf of the applicable Releasors) expressly agrees that fair consideration has been given by CJR for this release and it fully understands that this is a negotiated, complete and final release of all claims.
This release does not include a release of claims arising from representations in the Carl's Jr.
Franchise Disclosure Document provided to any Releasor in connection with the Agreement or any claims arising under any applicable state or federal franchise laws regulating the offer or sale of the franchise for the Agreement as of the date of the Agreement (including without limitation the FTC Rule on Franchising (16 C.F.R.
Part 436)).
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to the 2024 Carls FDD, the Guarantors' agreement is made as an inducement to execute the Carl's Jr. Restaurant Franchise Agreement. The Guarantors, who must be members of the Franchisee's Continuity Group, a 10% Owner, or their spouse, personally and unconditionally agree to the terms outlined in the agreement. This indicates that certain individuals associated with the franchisee are required to provide a personal guarantee, ensuring the franchisee fulfills their obligations under the Franchise Agreement.
Furthermore, the Guarantors provide a general release, waiving claims against Carls, its parents, subsidiaries, affiliates, predecessors, successors, and their respective officers, directors, managers, shareholders, members, agents, and employees. This release covers any claims, demands, liabilities, and causes of action, whether known or unknown, vested or contingent, or suspected, based on events occurring on or before the date of the Guarantee. The release includes claims arising under federal, state, and local laws, rules, and ordinances, as well as claims for contribution, indemnity, subrogation, and claims related to the Franchise Agreement and other agreements between the Guarantor and Carls.
However, the release does not extend to claims arising from representations in the Carl's Jr. Franchise Disclosure Document or claims arising under applicable state or federal franchise laws regulating the offer or sale of the franchise. This ensures that the Guarantors retain their rights to pursue claims related to misrepresentations in the FDD or violations of franchise laws. The agreement stipulates that fair consideration has been given by Carls for this release, and the Guarantor acknowledges that it is a negotiated, complete, and final release of all claims, with the specified exceptions.