What outstanding obligations must be satisfied before a Carls franchise transfer can be approved?
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.
- (4) Franchisee is not then in material default of any provision of this Agreement or any other agreement between Franchisee and CJR or its affiliates, is in good standing as a franchisee with CJR and its affiliates, is not in default beyond the applicable cure period under any real estate lease, equipment lease or financing instrument relating to the Franchised Restaurant and is not in default beyond the applicable cure period with any vendor or supplier to the Franchised Restaurant.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, before a franchise transfer can be approved, all of the franchisee's accrued monetary obligations to Carls and its affiliates must be satisfied. This includes obligations arising under the Franchise Agreement or otherwise.
In addition to monetary obligations, all other outstanding obligations related to the franchised restaurant must be satisfied. These obligations include, but are not limited to, bills from suppliers, taxes, judgments, and any required governmental reports, returns, affidavits, or bonds. Carls retains the right to require that a reasonable sum of money be placed in escrow to ensure that all of these obligations are satisfied.
Carls also requires that the franchisee is not in material default of any provision of the Franchise Agreement or any other agreement between the franchisee and Carls or its affiliates. The franchisee must be in good standing and not in default beyond any applicable cure period under any real estate lease, equipment lease, or financing instrument relating to the franchised restaurant, or with any vendor or supplier to the franchised restaurant.