Are there any geographic restrictions on Carls' ability to solicit customers?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
You may only sell or distribute products identified by some or all of the Proprietary Marks from the Franchised Location; you may not use any other method or channel of distribution. We do not impose any geographic restrictions on your ability to solicit customers; however, see Item 13 for Internet restrictions. In addition, you must participate in all online ordering and delivery programs that we may designate from time to time and comply with the terms and conditions of such programs, including any geographic or other delivery restrictions. There are no restrictions on our ability to solicit customers, nor must we pay any compensation to you for soliciting or accepting orders. We reserve all rights to use and license the Carl's Jr. System other than those we expressly grant to you. We reserve the right to merchandise and distribute goods and services identified by the Proprietary Marks (or different proprietary marks) through any method or channel of distribution, including the Internet.
Source: Item 12 — TERRITORY (FDD pages 54–56)
What This Means (2024 FDD)
According to Carls' 2024 Franchise Disclosure Document, franchisees generally face no geographic restrictions on soliciting customers for their franchised restaurants. However, this is subject to Item 13, which likely pertains to online or internet-based restrictions. Carls also requires franchisees to participate in any online ordering and delivery programs that they may designate, which may include geographic or other delivery restrictions.
Carls retains the right to solicit customers without any obligation to compensate the franchisee for orders they solicit or accept. Furthermore, Carls reserves the right to use any distribution channels, including the internet, to make sales using their trademarks, even within a franchisee's development territory. This means that while franchisees can generally solicit customers without geographic limitations, Carls can also directly compete within the same areas.
It is important to note that if a franchisee signs a Development Agreement, they will receive a Development Territory, which is mutually agreed upon with Carls. However, even within this territory, franchisees may face competition from other franchisees, company-owned outlets, or other distribution channels controlled by Carls. The Development Territory's perimeters are defined in the Development Agreement and can vary in size depending on population density and the franchisee's development commitments. Prospective franchisees should carefully review Item 13 and the terms of the Development Agreement to fully understand any potential restrictions or competitive overlaps.