Regarding a Crisis Situation at a Carls franchised restaurant, is a franchisee prohibited from making announcements to the news media, and if so, are there any exceptions?

According to Carls's 2024 Franchise Disclosure Document, a franchisee is generally prohibited from making announcements to the news media regarding a crisis situation at their restaurant. A "Crisis Situation" is defined as an event occurring at the franchised restaurant that may damage the Proprietary Marks, the System, or the reputation of Carls.

The FDD states that in the event of a crisis, the franchisee must first contact appropriate emergency care providers to address the immediate harm or injury. Secondly, the franchisee must immediately inform Carls of the crisis by telephone. Following these initial steps, the franchisee is required to refrain from making any internal or external announcements, which includes communication with the news media.

However, there is an exception to this rule: a franchisee may communicate with the news media if directed to do so by Carls or by public health officials. This provision ensures that Carls maintains control over public messaging during a crisis, while also allowing for necessary communication as directed by public health authorities. This is a fairly standard practice in franchising, as franchisors want to control brand reputation and messaging.

This requirement means that a Carls franchisee must be prepared to defer to Carls's judgment and follow their instructions during a crisis. Failure to comply with these communication guidelines could potentially lead to breaches of the franchise agreement and possible legal repercussions.