What obligations does a Carls franchisee have upon termination or non-renewal of the franchise agreement?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
| Provision | Franchise | Summary | |
|---|---|---|---|
| Agreement | |||
| i. | Your obligations on termination/nonrenewal | Section 22 | Obligations include: immediately cease operating the Franchised Restaurant; payment of amounts due; return OPM; continued observance of covenants; discontinue use of Proprietary Marks; complete de-identification of the Franchised Restaurant; and upon termination based on your default, payment of future lost royalties. |
Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 61–66)
What This Means (2024 FDD)
According to the 2024 FDD, a Carls franchisee has several obligations upon termination or non-renewal of the franchise agreement. These obligations are detailed in Section 22 of the Franchise Agreement.
Upon termination or non-renewal, a franchisee must immediately cease operating the Franchised Restaurant. They are also required to make payment of all outstanding amounts due to Carls. The franchisee must return the Operations and Procedures Manual (OPM) to Carls and continue to observe any applicable covenants outlined in the agreement.
Additionally, the franchisee is obligated to discontinue the use of any of Carls' proprietary marks and must complete the de-identification of the Franchised Restaurant, removing all branding and signage. If the termination is based on the franchisee's default, they may also be required to pay future lost royalties to Carls. These stipulations ensure that the franchisee disassociates entirely from the Carls brand and compensates Carls for any losses incurred due to the termination.