During the period between Carls' Purchase Notice and Closing, does Carls have the right to appoint a manager to control the day-to-day operations of the Franchised Restaurant?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
From the date of CJR's Purchase Notice until Closing:
(1) Franchisee shall operate the Franchised Restaurant and maintain the Assets in the usual and ordinary course of business and maintain in full force all insurance policies required under this Agreement; and
(2) CJR shall have the right to appoint a manager, at CJR's expense, to control the day-to-day operations of the Franchised Restaurant and Franchisee shall cooperate, and instruct its employees to cooperate, with the manager appointed by CJR.
Alternatively, CJR may require Franchisee to close the Franchised Restaurant during such time period without removing any Assets from the Franchised Restaurant.
The Purchase Price shall be paid in cash or cash equivalents at the closing of the purchase ("Closing"), which shall take place no later than 60 days after the date of CJR's Purchase Notice.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, during the period between CJR's Purchase Notice and the Closing, CJR (Carls) does have the right to appoint a manager to oversee the day-to-day operations of the franchised restaurant. The franchisee is obligated to cooperate with this manager and instruct their employees to do the same. This manager will be appointed at CJR's expense.
This provision gives Carls significant control over the restaurant's operations during the transition period if Carls decides to purchase the assets of the franchise. Alternatively, Carls can require the franchisee to close the restaurant during this period without removing any assets.
This clause is important for prospective franchisees to understand, as it outlines Carls's rights during a potential purchase scenario. Franchisees should be prepared to relinquish control to a manager appointed by Carls or potentially close the restaurant temporarily if Carls exercises its purchase option. The closing must take place no later than 60 days after the date of CJR's Purchase Notice.