When transferring a Carls franchise, what liability does the transferor retain?

According to Carls's 2024 Franchise Disclosure Document, Carls's decision regarding a proposed franchise transfer does not create any liability for Carls. Specifically, Carls is not liable to the transferee if Carls consents to the transfer but the transferee subsequently experiences financial difficulties. Additionally, Carls is not liable to the franchisee (the transferor) or the proposed transferee if Carls withholds consent to the transfer.

This means that if a franchisee sells their Carls franchise, they remain responsible for their existing obligations under the Franchise Agreement unless specifically released. The approval of the transfer by Carls does not shield the original franchisee from liabilities if the new franchisee fails. Similarly, if Carls denies a transfer, neither the seller nor the potential buyer can hold Carls liable for that decision.

This clause protects Carls from potential lawsuits related to transfer decisions and the subsequent performance of the franchise under new ownership. Prospective franchisees should carefully consider these implications and seek legal counsel to understand their ongoing responsibilities even after transferring the franchise.