Does Carls have a right of first refusal to acquire my Carls business?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
e are no restrictions on our right to assign. | | | k. "Transfer" by you defined | Section 18.A. | Includes sale, assignment, transfer, conveyance, gift, pledge, mortgage or other encumbrance of any direct or indirect interest in you, the Franchise Agreement, the Franchise, the Franchised Restaurant, the assets of the Franchised Restaurant, the Franchised Location or any other assets pertaining to your operations under the Franchise Agreement. |
| Provision | Section In Franchise Agreement | Summary |
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Source: Item 17 — RENEWAL, TERMINATION, TRANSFER, AND DISPUTE RESOLUTION (FDD pages 61–66)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, Carls does have a right of first refusal to acquire your business. Specifically, Carls, or its designee, has the right to match any offer you receive for your Carls business. This is detailed in Section 18.J of the Franchise Agreement.
This right of first refusal means that if you receive an offer from a third party to buy your Carls franchise, you must first present that offer to Carls. Carls then has the option to purchase your franchise on the same terms and conditions as the third-party offer. If Carls matches the offer, you are obligated to sell your franchise to them instead of the third party.
This provision is fairly standard in franchising and gives Carls some control over who becomes a franchisee within their system. It allows Carls to maintain brand consistency and ensure that new franchisees meet their standards. As a prospective franchisee, it's important to understand that selling your business may require Carls's approval and that they could potentially step in to buy your franchise themselves.