During the term of the agreement, what is the geographic limitation on a Carls franchisee owning or operating a competing restaurant?

According to the 2024 Carls FDD, during the term of the franchise agreement, there is no geographical limitation on a franchisee's ability to own or operate a competing restaurant. However, this is subject to certain restrictions regarding the type of restaurant.

Specifically, a Carls franchisee cannot, without prior written consent from Carls, engage in any restaurant business that meets any of the following criteria: (i) whose sales of specific entrée items (hamburger, chicken, and breakfast sandwiches) are reasonably likely to account for 20% or more of the restaurant's sales of all entrée items during any daypart, (ii) that features or promotes any of these entrée items in its advertising, or (iii) that operates in a quick-service format.

After the franchise agreement expires, is transferred, or is terminated, the restriction applies to any restaurant business located within a 2-mile radius of the franchised location or any Carls restaurant. This restriction does not apply to existing restaurant or foodservice operations the franchisee already owns, if any, which are identified in Appendix A, or to other restaurants operated by the franchisee that are franchised by Carls or its affiliates.