Under what circumstances is the Addendum mentioned in this section of the Carls Franchise Agreement executed?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 23: RECEIPTS]
- 1. The provisions of this Addendum form an integral part of, and are incorporated into, the Development Agreement. This Addendum is being executed because: (A) the offer or sale of a franchise to Developer was made in the State of Minnesota; (B) Developer is a resident of the State of Minnesota; and/or (C) part or all of the Development Territory is located in the State of Minnesota.
- 2. The following sentence is added to the end of Sections 10.B.(5) and 11:
Notwithstanding the foregoing, Developer will not be required to assent to a release, assignment, novation, or waiver that would relieve any person from liability imposed by Minnesota Statute §§ 80C.01 - 80C.22.
3. Section 12.B.(9) is deleted and replaced with the following statement:
Developer's use or duplication of the Carl's Jr. System or any part of the Carl's Jr. System in any other business, or disclosure of any part of the Carl's Jr. System to others for use or duplication in any other business, would constitute an unfair method of competition, for which CJR would be entitled to all legal and equitable remedies, including the right to seek injunctive relief.
4. The following sentence is added to the end of Section 13.A.:
With respect to franchises governed by Minnesota law, CJR will comply with Minnesota Statute § 80C.14, Subdivision 3, 4, and 5, which requires, except in certain cases, that a franchisee be given 90 days notice of termination (with 60 days to cure) and 180 days notice for non-renewal of the franchise agreements.
5. The following sentences are added to the end of Sections 22.A.-B.:
Minnesota Statute § 80C.21 and Minnesota Rule 2860.4400J prohibit CJR from requiring litigation to be conducted outside Minnesota. In addition, nothing in the disclosure document or agreements can abrogate or reduce any of Developer's rights as provided for in Minnesota Statutes, Chapter 80C, or Developer's rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
[Item 23: RECEIPTS]
- 1. The provisions of this Addendum form an integral part of, and are incorporated into, the Franchise Agreement. This Addendum is being executed because: (A) the offer or sale of a franchise to Franchisee was made in the State of Washington; (B) Franchisee is a resident of the State of Washington; and/or (C) the Franchised Restaurant will be located or operated in the State of Washington.
- 2. The state of Washington has a statute, the Washington Franchise Investment Protection Act, RCW 19.100.180 ("Act"), which may supersede this Agreement in your relationship with CJR including the areas of termination and renewal of your franchise. There also may be court decisions which may supersede this Agreement in your relationship with CJR including the areas of termination and renewal of your franchise.
- 3. In the event of a conflict of laws, the provisions of the Act shall prevail.
- 4. A release or waiver of rights executed by Franchisee shall not include rights under the Act except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act, rights or remedies under the Act such as a right to a jury trial may not be enforceable.
- 5. Transfer fees are collectable to the extent that they reflect CJR's reasonable estimated or actual costs in effecting a transfer.
- 6. Any capitalized terms that are not defined in this Addendum shall have the meaning given them in the Franchise Agreement.
- 7. The provisions of this Addendum will be effective only to the extent that the jurisdictional requirements of the Act are met independently of this Addendum.
- 8. Except as expressly modified by this Addendum, the Franchise Agreement remains unmodified in full force and effect.
Source: Item 23 — RECEIPTS (FDD pages 80–480)
What This Means (2024 FDD)
According to the 2024 Carls FDD, the Addendum to the Franchise Agreement is executed under specific circumstances related to the location and residency of the franchisee. If the offer or sale of a franchise was made in a specific state, if the franchisee is a resident of that state, or if the franchised restaurant will be located or operated in that state, an addendum is incorporated into the Franchise Agreement. These states include Minnesota and Washington.
For Minnesota franchisees, the addendum modifies certain sections of the franchise agreement to ensure compliance with Minnesota state law. For example, it ensures that the franchisee's rights under Minnesota Statutes, Chapter 80C, are not reduced or abrogated by anything in the disclosure document or agreements. It also addresses litigation, stating that Carls cannot require litigation to be conducted outside of Minnesota.
For Washington franchisees, the addendum ensures compliance with the Washington Franchise Investment Protection Act. The addendum states that the Act may supersede the Franchise Agreement in areas such as termination and renewal. It also clarifies that transfer fees are collectable only to the extent that they reflect Carls's reasonable costs in effecting a transfer. These addenda serve to protect the franchisee's rights and ensure compliance with local laws, providing additional security for franchisees operating in these states.