Does Carls treat a franchisee's partial payment as anything other than a partial payment on account?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
No payment by Franchisee or acceptance by CJR of any monies under this Agreement for a lesser amount than due shall be treated as anything other than a partial payment on account. Franchisee's payment of a lesser amount than due with an endorsement, statement or accompanying letter to the effect that payment of the lesser amount constitutes full payment shall be given no effect and CJR may accept the partial payment without prejudice to any rights or remedies it may have against Franchisee. Acceptance of payments by CJR other than as set forth in this Agreement shall not constitute a waiver of CJR's right to demand payment in accordance with the requirements of this Agreement or a waiver by CJR of any other remedies or rights available to it pursuant to this Agreement or under applicable law. Notwithstanding any designation by Franchisee, CJR shall have sole discretion to apply any payments by Franchisee to any of its past due indebtedness for royalty fees, advertising contributions, purchases from CJR or its affiliates, interest or any other indebtedness. CJR has the right to accept payment from any other entity as payment by Franchisee. Acceptance of that payment by CJR will not result in that other entity being substituted for Franchisee.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to the 2024 Carls FDD, any partial payment made by a franchisee will be treated solely as a partial payment on the franchisee's account. This means that even if a franchisee includes a statement suggesting the partial payment constitutes full payment, Carls is not obligated to accept it as such and can still pursue further payment for the outstanding balance.
Carls retains the right to allocate any payments received from the franchisee towards any outstanding debts, including royalty fees, advertising contributions, purchases from Carls or its affiliates, or interest. This discretion allows Carls to prioritize the application of payments as it sees fit, regardless of any specific designations made by the franchisee. Carls also has the right to accept payments from another entity on behalf of the franchisee, but this acceptance does not substitute that entity for the franchisee in terms of the franchise agreement.
This policy protects Carls's financial interests by ensuring that it can pursue full payment of all amounts owed, even if partial payments are made. For a prospective franchisee, this means they must be prepared to pay all fees and amounts due in full and on time, as Carls is not obligated to consider partial payments as satisfying the entire debt. Franchisees should be aware that Carls maintains the right to pursue further action to recover any outstanding balances, regardless of partial payments made.