Under what circumstances can CJR defer or waive advertising fees for Carls franchisees or company restaurants?
Carls Franchise · 2024 FDDAnswer from 2024 FDD Document
CJR reserves the right, in its sole discretion, to: (1) suspend contributions to and operations of each fund for one or more periods that it determines to be appropriate; (2) terminate any fund upon 30 days' written notice to Franchisee and establish, if CJR so elects, one or more new advertising funds; and (3) upon the written request of any franchised or company restaurants, defer or waive, in whole or in part, any advertising fees required by this Section if, in CJR's sole judgment, there has been demonstrated unique, objective circumstances justifying any such waiver or deferral.
Source: Item 22 — CONTRACTS (FDD page 80)
What This Means (2024 FDD)
According to the 2024 Carls Franchise Disclosure Document, CJR (Carls Jr. Restaurants) reserves the right to defer or waive advertising fees for both franchised and company-operated restaurants. This decision is made at CJR's sole discretion.
The key condition for a waiver or deferral is the demonstration of "unique, objective circumstances" that justify such an action. This means that a franchisee or company restaurant must present a compelling case, based on specific and verifiable factors, to warrant relief from the standard advertising fee obligations. The FDD does not provide specific examples of what might constitute "unique, objective circumstances."
This clause provides Carls with flexibility to respond to specific challenges faced by individual locations. However, it also introduces an element of uncertainty for franchisees, as the criteria for obtaining a waiver or deferral are not clearly defined. Prospective franchisees should seek clarification from Carls regarding the types of circumstances that might qualify for such consideration and the process for requesting a waiver or deferral.
It's important to note that CJR's decision to defer or waive advertising fees is entirely discretionary. Even if a franchisee believes they meet the criteria, Carls is not obligated to grant the request. This highlights the importance of maintaining a strong financial position and carefully considering the ongoing advertising obligations associated with the franchise.