Regarding the Carl's Jr. development agreement, what representation does the Developer make to CJR concerning U.S. laws and engagement in terrorist activities?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
H. Compliance with U.S. Laws
Developer acknowledges that under applicable U.S. law, including, without limitation, Executive Order 13224, signed on September 23, 2001 ("Order"), CJR is prohibited from engaging in any transaction with any person engaged in, or with a person aiding any person engaged in, acts of terrorism, as defined in the Order. Accordingly, Developer represents and warrants to CJR that, as of the date of this Agreement, neither Developer nor any person holding any ownership interest in Developer, controlled by Developer, or under common control with Developer is designated under the Order as a person with whom business may not be transacted by CJR, and that Developer: (1) does not, and hereafter shall not, engage in any terrorist activity; (2) is not affiliated with and does not support any individual or entity engaged in, contemplating or supporting terrorist activity; and (3) is not acquiring the rights granted under this Agreement with the intent to generate funds to channel to any individual or entity engaged in, contemplating or supporting terrorist activity, or to otherwise support or further any terrorist activity.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to the 2024 Carl's Jr. Franchise Disclosure Document, the developer must acknowledge and comply with U.S. laws, specifically Executive Order 13224, which prohibits transactions with individuals or entities involved in terrorism. The developer represents and warrants to Carl's Jr. that, as of the agreement date, neither the developer nor any person with an ownership interest, controlled by, or under common control with the developer is designated under the Order as someone with whom Carl's Jr. cannot do business.
Specifically, the developer must confirm that they do not currently engage in any terrorist activity and will not do so in the future. They also affirm that they are not affiliated with or do not support any individual or entity involved in terrorist activities. Furthermore, the developer confirms that they are not acquiring the rights under the agreement to generate funds for or otherwise support any terrorist activity.
This clause ensures that Carl's Jr. is protected from potential legal and reputational risks associated with doing business with individuals or entities involved in terrorism. For a prospective developer, this means undergoing due diligence to ensure compliance with these regulations and maintaining ethical business practices throughout the term of the agreement. Failure to comply with these representations could result in termination of the development agreement and potential legal consequences.