When proposing a transfer of a Carls franchise, what information must the developer submit to CJR?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- B. Developer shall advise CJR in writing of any proposed Transfer, submit (or cause the proposed transferee to submit) a franchise application for the proposed transferee, submit a copy of all contracts and all other agreements or proposals and submit all other information requested by CJR relating to the proposed Transfer.
If CJR does not exercise its right of first refusal pursuant to Section 10.J., the decision as to whether or not to consent to a proposed Transfer shall be made by CJR in its sole discretion and shall include numerous factors deemed relevant by CJR.
These factors may include, but will not be limited to, the following:
(1) The proposed transferee (and if the proposed transferee is not a natural person, all persons that have any direct or indirect interest in the transferee as CJR may require) must demonstrate to CJR's satisfaction that it has extensive experience in high quality restaurant operations of a character and complexity similar to the restaurants franchised by CJR or its affiliates; must meet the managerial, operational, experience, quality, character and business standards for a developer promulgated by CJR from time to time; must possess a good character, business reputation and credit rating; must have an organization whose management culture is compatible with CJR's management culture; and must have adequate financial resources and working capital, as determined by CJR in its sole discretion, to meet Developer's development obligations under this Agreement.
(2) The sales price shall not be so high, in CJR's reasonable judgment, as to jeopardize the ability of the transferee to develop, maintain, operate and promote the Franchised Restaurants and meet financial obligations to CJR, third party suppliers and creditors.
Developer and CJR or its affiliates and all other restaurants operated by Developer that are franchised by CJR or its affiliates.
(6) Unless waived by CJR in its sole discretion, the transferee and those employees hired by transferee to fill certain designated positions shall complete the development training programs provided in Section 5.F.
(7) The transferee and each of the transferee's affiliates that have entered into a development or franchise agreement with CJR or its affiliates must, as of the date of the request for CJR's consent to the Transfer, be in compliance with all obligations to CJR or its affiliates under those agreements
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to the 2024 Carls Franchise Disclosure Document, a developer proposing a transfer must inform CJR in writing. The developer must submit a franchise application for the proposed transferee, along with copies of all contracts, agreements, proposals, and any other information CJR requests regarding the transfer.
CJR's decision to consent to the transfer is at its sole discretion and will include numerous factors. These factors include whether the proposed transferee has extensive experience in high-quality restaurant operations similar to those franchised by CJR, meets CJR's managerial, operational, experience, quality, character, and business standards, possesses a good character, business reputation, and credit rating, has a compatible management culture, and has adequate financial resources and working capital to meet the developer's obligations.
Additionally, the sales price should not jeopardize the transferee's ability to develop, maintain, operate, and promote the franchised restaurants or meet financial obligations to CJR, third-party suppliers, and creditors. Unless waived by CJR, the transferee and designated employees must complete the development training programs. The transferee and its affiliates must also be in compliance with all obligations to CJR or its affiliates under any existing agreements as of the date of the transfer request.
It is important for prospective Carls franchisees to understand these requirements, as failure to provide the necessary information or meet the specified criteria could result in CJR denying the transfer. This level of detail is typical for franchise agreements, as franchisors want to ensure that any new franchisee is well-qualified and financially stable to protect the brand and the interests of other franchisees.