What representations and warranties is CJR entitled to when exercising its option to purchase assets from a Carls franchisee?

According to the 2024 FDD, when Carls exercises its option to purchase assets from a franchisee, it is entitled to customary representations and warranties. These assurances cover that the assets are free and clear, or if not, that there is accurate and complete disclosure regarding several key aspects.

Specifically, Carls is entitled to representations and warranties related to the ownership, condition, and title of the assets. This ensures that Carls is fully aware of who owns the assets, their current state, and the legal basis for ownership. Additionally, Carls is entitled to representations and warranties concerning any liens and encumbrances on the assets, providing clarity on any outstanding debts or claims against them.

Furthermore, Carls receives representations and warranties regarding environmental and hazardous substances, which protects Carls from inheriting environmental liabilities associated with the assets. Finally, Carls is entitled to representations and warranties about the validity of contracts and liabilities that could affect Carls or the assets, whether these liabilities are immediate or potential. This comprehensive set of representations and warranties aims to protect Carls from unforeseen issues and liabilities when purchasing assets from a franchisee.