Under what circumstances can CJR waive the requirement for members of the Continuity Group and their spouses to guarantee the Developer's payment and performance under the Carls Development Agreement?

According to Carls's 2024 Franchise Disclosure Document, all members of the Continuity Group and their spouses are typically required to guarantee the Developer's payment and performance under the Development Agreement. The Continuity Group includes the Development Principal, all holders of a direct or indirect interest of 10% or more in the Developer, all 10% owners of the Developer's general partner if the Developer is a limited partnership, and all 10% owners of a business entity that owns a controlling interest in the Developer. The Continuity Group must collectively own at least 51% of the ownership interests in the Developer.

However, Carls retains the right to waive this guarantee requirement for some or all of these individuals at its sole discretion. This waiver can also include limiting the scope of the guarantee. Carls also reserves the right to request personal financial statements from any guarantor periodically.

This discretionary power allows Carls some flexibility in assessing the financial strength and commitment of individual members within the Developer's Continuity Group. For a prospective franchisee, this means that while a guarantee is generally required, there may be room for negotiation or exceptions based on individual circumstances, though approval is not assured. It is important to note that Carls's decision to waive or limit the guarantee is entirely at their discretion, and they are not obligated to do so.