Under what circumstances will Carls charge a Reimbursement of Insurance Costs, and when is this fee due?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
e. | | Costs and Attorneys' Fees | CJR's costs and expenses | As incurred | If we prevail in litigation regarding enforcement of the terms of any agreement with you, you must pay our attorneys' fees and costs. |
| Type of Fee (1) | Amount | Due Date | Remarks |
|---|---|---|---|
| Carl's Jr. Renewal Fee | $5,000 for a renewal term of 5 years or less or $10,000 for a renewal term greater than 5 years, but no more than 10 years | At the time the new franchise agreement is signed | |
| Collection Costs and Expenses | CJR's costs and expenses | On demand, if required | These costs and expenses include, but are not limited to, costs and commissions due a collection agency, reasonable attorneys' fees, costs incurred in creating or replicating reports demonstrating Gross Sales of the Franchised Restaurant, court costs, expert witness fees, discovery costs and reasonable attorneys' fees and costs on appeal, together with interest charges on all of the foregoing. |
| Relocation | CJR's reasonable expenses | On demand, if required | You may not relocate the Franchised Restaurant without CJR's prior written consent, which may be withheld by CJR in its sole discretion. If we approve a relocation of your Franchised Restaurant, we have the right to charge you for all reasonable expenses actually incurred in connection with consideration of the request. |
| Reimbursement of Insurance Costs | Cost of obtaining coverage | Immediately upon receipt of invoice | If you fail to procure or maintain the required insurance, we may procure the insura |
Source: Item 6 — Other Fees (FDD pages 26–31)
What This Means (2024 FDD)
According to Carls's 2024 Franchise Disclosure Document, a franchisee may be charged a Reimbursement of Insurance Costs. This fee is incurred if the franchisee fails to procure or maintain the required insurance coverage. In such cases, Carls has the option to procure the insurance themselves and then charge the franchisee for the cost of the coverage, along with any out-of-pocket expenses Carls incurs.
The amount of the reimbursement will be the actual cost of obtaining the necessary insurance coverage. This cost is collected by Carls on behalf of the insurance company with which they secure the coverage.
The Reimbursement of Insurance Costs is due immediately upon the franchisee's receipt of an invoice from Carls. This means a franchisee needs to be prepared to pay this fee promptly to avoid any further complications or potential breaches of the franchise agreement.