After the termination of a Carls franchise agreement, is the franchisee still bound by the covenants in Section 20?

According to the 2024 Carls Franchise Disclosure Document, franchisees are still bound by the covenants in Section 20 after the termination of the franchise agreement. Specifically, franchisees and all persons and entities subject to the covenants contained in Section 20 must continue to abide by those covenants. They must not, directly or indirectly, take any action that violates those covenants.

This means that even after a Carls franchise agreement ends, the franchisee remains legally obligated to uphold the terms outlined in Section 20. These obligations could include restrictions on operating a competing business near a former Carls location or other existing Carls restaurants. The restrictions extend not only to the franchisee but also to any individuals or entities connected to them who are subject to these covenants.

For a prospective Carls franchisee, this highlights the importance of carefully reviewing and understanding Section 20 of the franchise agreement. The obligations within this section extend beyond the agreement's term, potentially impacting the franchisee's future business endeavors. Franchisees should seek legal counsel to fully grasp the implications of these post-termination covenants and how they might affect their long-term plans.