What are the requirements for a Carls franchisee to be considered 'growth ready' and satisfy CJR's financial requirements for new restaurant development under the 2024 CJR development incentive program?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
- A. In order to stimulate the development of new franchised Carl's Jr. Restaurants and the continued expansion of the System, CJR has established the 2024 CJR development incentive program ("Program") for franchisees that are growth ready and satisfy CJR's financial requirements for new restaurant development and that open a newly-constructed Carl's Jr. Restaurant at a location accepted by CJR pursuant to a Franchise Agreement with CJR signed no later than May 24, 2024 (the "New Restaurant Franchise Agreement"), provided that the Carl's Jr. Restaurant is opened in accordance with the timeline set forth in the Franchise Agreement.
Developer acknowledges that, in order to preserve and enhance the reputation and goodwill of all restaurants franchised by CJR and the goodwill of the Proprietary Marks, all Franchised Restaurants must be properly developed, operated and maintained. Accordingly, Developer agrees that CJR may refuse to accept a site for a proposed Franchised Restaurant unless Developer demonstrates sufficient financial capabilities, in CJR's sole judgment, applying standards consistent with criteria CJR uses to establish restaurants in other comparable market areas, to properly develop, operate and maintain the proposed Franchised Restaurant. To this end, Developer shall furnish CJR with such financial statements and other information regarding Developer (or its Affiliated Entity, as defined in Section 3.E.) and the development and operation of the proposed Franchised Restaurant, including, without limitation, investment and financing plans for the proposed Franchised Restaurant, as CJR reasonably may require.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to the 2024 FDD, Carls has established a 2024 CJR development incentive program to stimulate the development of new franchised Carls Jr. Restaurants and the continued expansion of the System. To be eligible for the program, a franchisee must be 'growth ready' and satisfy CJR's financial requirements for new restaurant development. Additionally, the franchisee must open a newly-constructed Carls Jr. Restaurant at a location accepted by CJR pursuant to a Franchise Agreement with CJR signed no later than May 24, 2024, and the restaurant must be opened in accordance with the timeline set forth in the Franchise Agreement.
To have a proposed site accepted, Carls requires that the franchisee demonstrates sufficient financial capabilities, in CJR's sole judgment, applying standards consistent with criteria CJR uses to establish restaurants in other comparable market areas, to properly develop, operate and maintain the proposed Franchised Restaurant. To this end, the franchisee must furnish CJR with financial statements and other information regarding the franchisee (or its Affiliated Entity) and the development and operation of the proposed Franchised Restaurant, including, without limitation, investment and financing plans for the proposed Franchised Restaurant, as CJR reasonably may require.
While the FDD mentions the financial requirements and the May 24, 2024 deadline, it does not explicitly define what constitutes being 'growth ready'. A prospective franchisee should seek clarification from Carls regarding the specific criteria used to determine 'growth readiness' to fully understand the requirements for participating in the incentive program.